On July 7, 2025, at the Calgary Stampede, Alberta Premier Danielle Smith and Ontario Premier Doug Ford signed two memorandums of understanding one focused on energy corridors and another on interprovincial trade. Under the trade MOU, Alberta and Ontario pledged to boost the movement of goods specifically alcohol and vehicles across provincial lines, while jointly advocating for federal regulatory reform. This landmark pact marks a fresh approach to Canada’s longstanding internal trade barriers, promising to reshape the economic landscape of both provinces and reverberate nationally.
The Historical Context of Internal Trade Barriers
Canada’s provinces have long maintained individual regulations governing the sale, transportation, and taxation of goods. From liquor distribution monopolies to vehicle standards, these divergent policies erect “invisible walls” that inhibit commerce. Economists estimate that provincial trade barriers cost Canadians roughly $200 billion annually in lost economic efficiency approximately 9 percent of national GDP.
During the spring 2025 federal election, Prime Minister Mark Carney vowed to “eliminate interprovincial trade barriers” and create “free trade by Canada Day.” Yet progress has lagged, as provinces balance protection of local industries against national integration. Meanwhile, U.S. President Donald Trump’s tariff skirmishes with Canada have amplified urgency, pushing provinces to diversify internal markets and reduce reliance on American demand.
The 2025 Calgary Stampede Agreement
At a brief morning press conference in Calgary, Daniels Smith and Doug Ford unveiled two complementary MOUs. The first commissions a feasibility study into new pipelines and rail lines to link Alberta’s oil, gas, and critical minerals to Ontario refineries, seaports, and the Ring of Fire mineral region. The second details measures to deepen the interprovincial trade of alcohol and motor vehicles.
“Friends, this is how we protect Canada,” Ford declared. Under the trade MOU, Ontario commits to expanding market access for Alberta-produced beer, wine, and spirits. In reciprocity, Alberta will purchase more Canadian-made cars for its government fleet, strengthening Ontario’s auto sector. Both premiers emphasized the pact as a blueprint for provincial self-reliance and mutual support amid global economic headwinds.
Key Provisions of the Interprovincial Trade MOU
- Alcohol Market Access
- Vehicle Procurement
- Regulatory Alignment
- Advocacy for Federal Reform
Political Motivations and Strategic Goals
Responding to U.S. Tariffs
Trump’s imposition of steel and aluminum tariffs in 2023–24 highlighted Canada’s vulnerability to external policy shocks. Ford and Smith view closer interprovincial ties as a hedge against American trade uncertainty: “The days of relying on the United States 100 percent they’re done, they’re gone,” Ford remarked. By deepening Canada’s internal market, they aim to insulate their economies from foreign tariffs and protect domestic jobs.
Challenging the Federal Status Quo
Smith has been a vocal critic of federal energy and environmental regulations, including net-zero mandates and pipeline moratoriums. By forging agreements outside Ottawa’s direct involvement, Alberta asserts its autonomy in resource development. Ford, meanwhile, has championed provincial rights throughout his tenure. Their pact signals a coalition of provincial leaders ready to shape national policy, potentially pressuring Carney to accede to subnational demands.
Western Alienation Meets Central Partnership
Alberta’s relationship with Ottawa has often been fractious, with Albertans feeling overlooked in national decision-making. By allying with Ontario the country’s most populous province Smith gains a powerful partner to amplify Alberta’s voice. For Ford, the alliance counters perceptions of Ontario’s east-coast centrism, underscoring the interdependence of Canada’s heartland economies.
Economic Impacts on Alberta and Ontario
Boost for Alberta’s Alcohol Sector
Alberta’s craft breweries and distilleries, already riding a wave of craft-beverage popularity, stand to gain direct entry into Ontario’s 15 million-strong market. Reduced licensing hurdles can translate to lower distribution costs, increased sales volumes, and expanded tourism ties brewery tours and tasting routes that stretch from Edmonton to Niagara, for example.
Surge for Ontario’s Auto Industry
Ontario’s auto sector, concentrated around Toronto and Windsor, has faced production shifts and competition from Asian manufacturers. Alberta’s commitment to source more government vehicles from Ontario firms can create immediate demand for 5,000–10,000 cars annually, reinforcing local assembly plants and component suppliers.
Ancillary Benefits
- Logistics and Services: Freight companies and customs brokers will see growth in interprovincial shipments.
- Job Creation: From brewing to assembly lines, analysts project a cumulative 3,000–5,000 jobs over two years in targeted sectors.
- Tax Revenue: Increased sales and corporate activity could boost provincial revenues by $150 million to $200 million annually.
Implications for the National Economy
The pact lays groundwork for Canada to reclaim its internal market. Economists argue that unified domestic trade can reduce “deadweight loss” associated with regulatory divergence lowering costs for consumers and businesses alike. If extended nationwide, harmonized standards could unlock the full $200 billion in annual gains estimated by earlier studies.
Strengthening Supply Chains
By syncing procurement and distribution, Alberta and Ontario create efficient supply loops Ontario steel into Alberta pipelines; Alberta oil into Ontario refineries. Scaling this model to other provinces could foster pan Canadian corridors for energy, minerals, and manufactured goods, enhancing competitiveness on global markets.
Diversification of Export Options
Better links between provinces may facilitate joint export ventures, such as liquefied natural gas shipments from Alberta via Ontario ports or vehicle exports through Atlantic Canada. This interprovincial cohesion complements existing free-trade agreements with the U.S., EU, and Asia-Pacific nations.
Regulatory and Federal–Provincial Relations
The agreement confronts Ottawa to either adapt or risk provincial networks charting independent paths. Carney’s promise to dismantle domestic trade barriers now collides with a united provincial front demanding swift action. Future federal budget bills or regulatory orders may incorporate provisions to lower provincial import duties, modernize the Agreement on Internal Trade, or legislate mutual recognition of professional standards.
Pros of the Agreement
- Economic Growth: Opens new markets for Alberta’s alcohol industry and Ontario’s auto sector.
- Job Creation: Potentially thousands of new positions in manufacturing, logistics, and services.
- Supply Chain Resilience: Diversifies trade away from sole dependence on the U.S.
- Federal Reform Catalyst: Puts pressure on Ottawa to enact broader liberalization.
- Interprovincial Solidarity: Forges a constructive alliance bridging Western and Central Canada.
Cons of the Agreement
- Regional Imbalances: Might favor larger provinces, leaving smaller jurisdictions sidelined.
- Regulatory Race to the Bottom: Harmonization risks lowering standards in areas like environmental review or worker protections.
- Strained Federalism: Could exacerbate tensions if Ottawa feels bypassed.
- Short-Term Disruptions: Local producers in each province may face sudden competition before adapting.
- Political Optics: Critics may view the pact as grandstanding or as a distraction from other policy failures.
Conclusion
The Danielle Smith Doug Ford interprovincial trade agreement represents a bold experiment in Canadian federalism. By eroding trade barriers between two powerhouse provinces, it charts a path toward a more integrated and resilient domestic economy. If successful, it could catalyze similar accords among Quebec, the Atlantic provinces, and the Prairies, culminating in the long-elusive goal of seamless internal trade.
However, momentum hinges on sustained collaboration, vigilant oversight of regulatory standards, and constructive engagement with Ottawa. As other premiers watch closely, the Calgary Stampede accord may either become a template for national renewal or a cautionary tale of unilateral provincial action. In either case, Canada’s internal market will never look the same again.