Interprovincial trade flows and frictions

Released: 2025-03-19

Internal trade in Canada, 1981 to 2023

Canada has a longstanding reputation as a trading nation, with its economy being heavily reliant on global trade. However, the vital role of internal trade in Canada is often overlooked. Internal trade is a key part of the Canadian economy, contributing to economic competitiveness by generating jobs, enabling business growth, broadening consumer options and fostering overall economic development.

Approximately $532 billion worth of goods and services were traded across provincial and territorial borders in 2023, accounting for 18.1% of Canada's gross domestic product (GDP). Of this total, $301 billion (56.6%) was for services, while the remainder was for merchandise trade (Table 36-10-0222-01).

The contribution of internal trade to Canada's gross domestic product has declined over the last four decades

The contribution of internal trade to Canada's GDP has seen a notable decline over the last four decades, falling from 26.7% in 1981 to 18.1% in 2023 (Chart 1). While internal exports and imports grew by 440.8% during this period, international trade (both exports and imports) expanded at a much faster rate, exceeding 900% growth (Chart 2). This long-term trend highlights a structural shift in Canada's economy, potentially reflecting factors such as increased international trade agreements, changes in domestic consumption patterns, or shifts in the economic importance of internal trade relative to other economic activities.

Chart 1 
Internal trade as a share of gross domestic product (GDP) and total trade, 1981 to 2023

Chart 2 
Internal trade compared with international trade, 1981 to 2023

The share of internal trade to total trade fell by one-third from 1981 to 2023

The share of internal trade to Canada's total trade fell sharply in the late 20th century, dropping from 50.5% in the early 1980s to 31.9% in 1999. It slowly trended upward since then to reach 35.3% in 2023. However, there were variations across provinces.

In Prince Edward Island, Nova Scotia, Manitoba and the three territories, internal trade accounted for at least half of total trade (which includes both internal and international trade) in 2023.

Conversely, Alberta, British Columbia, New Brunswick, Newfoundland and Labrador, Ontario, Quebec and Saskatchewan conducted more trade internationally than they did internally in 2023 (Table 1).

The flow of trade across provinces and territories changed over the last four decades, mostly as a result of multiple free trade agreements with other countries, increases in international commodity prices and federal action plans on internal trade.

More than half of internal trade is in services

Internal trade has increasingly shifted toward services, as economies have become more service-oriented. In 1981, services accounted for just over one-third (36.7%) of internal trade, but this share grew to more than half (56.5%) in 2023.

Manufacturing accounts for one-third of internal trade

The manufacturing industry played a pivotal role in Canada's internal trade in 2021, contributing one-third (33.3%) of total trade between provinces and territories. This dominance reflects the industry's integral role in the national economy. Finance, insurance, real estate, rental, leasing and holding companies (11.8%), mining, quarrying, and oil and gas extraction (11.2%) and wholesale trade (10.6%) each accounted for just over one-tenth of internal trade. Combined, professional, scientific and technical services (8.4%), transportation and warehousing (6.9%) and information and cultural industries (5.1%) accounted for just over one-fifth of internal trade (Chart 3).

Chart 3 
Contribution to internal trade, by industry, 2021 

The fishing, hunting and trapping industry was the most reliant on internal trade in 2021, with over one-quarter (28.8%) of its total output moving from one province or territory to another. The wholesale trade industry followed, at 24.2%.

While manufacturing remained the largest contributor to internal trade in 2021, accounting for one-third of total trade, less than one-fifth (18.6%) of its total industry output went to internal trade.

In comparison, information and cultural industries, despite their smaller role in internal trade, moved almost one-fifth (17.9%) internally in 2021 (Chart 4).

This contrast highlights the varying degrees to which different industries engage in internal trade, with some industries, like manufacturing, exhibiting large internal trade contributions relative to their share of output going into internal trade, while others, like fishing and wholesale trade, demonstrate a higher reliance on internal trade.

Chart 4 
Ratio of internal trade to industry output, 2021

Contact information

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