By Richard Martin, President, Alcera Consulting Inc.
Canada’s economy is at a critical juncture. For decades, we have faced persistent challenges: insufficient productivity, high income taxes, capital gains taxes, interprovincial trade barriers, obstacles to resource development, and an over-reliance on the U.S. market. While these issues have been acknowledged and criticized, little has been done to implement the necessary structural reforms. Now, with the threat of protectionist policies from the U.S. under unpredictable leaders like Trump, Canada must pivot decisively. Retaliating with tariffs and boycotts is a short-term game that we cannot win. Instead, we need a strategy that embraces bold reforms, revitalizes our economy, and sets us on a long-term path of growth, innovation, and prosperity.
Breaking Free from the Rut
The key to Canada’s success lies in maximizing economic freedom—creating an open, competitive, and investment-friendly environment. Here’s how we do it:
1. Lower All Tariffs and Trade Barriers with the World
Canada should adopt a policy of unilateral free trade, reducing tariffs and trade barriers regardless of how other countries treat our exports. This will increase competition, reduce prices for consumers, and attract foreign investment by positioning Canada as one of the most open economies globally. By opening our markets to the world, we will deepen integration into global supply chains and strengthen relationships with key regions such as Europe, Asia, and Latin America.
2. Eliminate Interprovincial Trade and Economic Barriers
Economic fragmentation within Canada has stifled growth for too long. Regulatory differences between provinces hinder the flow of goods, services, and labour, preventing businesses from scaling efficiently. Eliminating these barriers will unleash Canada’s full economic potential, increasing productivity, reducing costs, and fostering greater labour mobility. This reform alone could boost Canada’s GDP by as much as $50 billion annually.
3. Eliminate the Capital Gains Tax
The capital gains tax discourages investment and entrepreneurial risk-taking. By eliminating it, Canada would unlock massive capital inflows, drive innovation, and encourage long-term investments in infrastructure, technology, and startups. Entrepreneurs and investors would benefit from higher rewards for success, leading to job creation and economic diversification.
4. Repeal Restrictive Laws on Resource Development and Transportation
Canada’s abundant natural resources are one of our greatest competitive advantages. However, restrictive regulations and opposition to infrastructure projects have prevented us from fully capitalizing on this strength. Repealing these barriers will allow for the efficient development and transportation of oil, gas, and other resources to global markets. By expanding infrastructure—including pipelines, gas liquefaction facilities, railways, and ports—we can ensure that our resources reach world markets efficiently, generating wealth and creating jobs.
5. Diversify Trade Agreements Globally
Canada’s over-reliance on the U.S. market exposes us to significant risks during trade disputes or protectionist shocks. To mitigate these risks, we must continue expanding free trade agreements with emerging and diversified markets, such as those in Southeast Asia, Africa, and Latin America. Diversifying our trade partners will create new growth opportunities and ensure greater resilience in the face of external challenges.
6. Lower Income Taxes
Lowering income taxes will increase disposable income for Canadians, boost consumer spending, and incentivize work and entrepreneurship. It will also help retain high-skilled workers and attract global talent. This reduction can be balanced through higher economic growth, which will generate additional government revenue over time.
7. Increase Defence Spending
A strong national defence ensures Canada’s sovereignty and protects key trade routes, especially in the Arctic and maritime zones. Investing in defence infrastructure, aerospace, and cybersecurity will not only enhance our security but also stimulate industrial growth and technological innovation. Strengthening our role within NATO and NORAD will further solidify our international partnerships.
8. Involve First Nations in Resource Development
To ensure inclusive growth, we must collaborate with First Nations on resource projects through equity partnerships, revenue sharing, and job creation initiatives. By involving First Nations in decision-making processes, we can foster long-term socioeconomic development and reduce opposition to infrastructure projects. This approach will benefit all Canadians while aligning with reconciliation goals.
Supporting Workers Through Economic Transitions
Structural reforms can cause short-term dislocation and upheaval, but we can address this through targeted financial support and retraining programs. Temporary assistance, relocation incentives, and industry-specific transition funds will help displaced workers manage the transition. In collaboration with provincial governments, we can implement retraining and upskilling programs tailored to emerging industries such as tech, green energy, and infrastructure development. Lifelong learning initiatives will ensure that workers continuously upgrade their skills, keeping pace with a dynamic economy.
Avoiding the Mistakes of the Past
The Smoot-Hawley Tariff Act of 1930 is a cautionary tale of the dangers of protectionism. It triggered a global trade collapse, deepened the Great Depression, and contributed to geopolitical instability by exacerbating economic hardship in Germany and Japan. Today’s global economy is even more interconnected, with supply chains spanning borders multiple times. Retaliatory tariffs would have a compounding effect, driving up costs and damaging productivity. Instead of repeating the mistakes of the past, Canada must lead with an open-market strategy.
A Vision for Canada’s Economic Future
By embracing maximum economic freedom, Canada can achieve:
- Higher productivity: Through increased competition, technological innovation, and infrastructure investment.
- Greater investment: Eliminating barriers will attract foreign capital and encourage domestic reinvestment.
- Trade diversification: Expanding beyond the U.S. market will protect us from external shocks and create new opportunities.
- Inclusive growth: Collaborating with First Nations will ensure that economic progress benefits all Canadians.
This strategy isn’t about reacting to the short-term pressures of U.S. protectionism; it’s about fundamentally reshaping Canada’s economic landscape for long-term growth. By making bold decisions today, we can build a more prosperous, resilient, and innovative Canada—one that is ready to thrive in a competitive global economy.
The time for action is now. Canada’s future depends on it.
About the Author
Richard Martin is the founder and president of Alcera Consulting Inc., a strategic advisory firm specializing in exploiting change (www.exploitingchange.com). Richard’s mission is to empower top-level leaders to exercise strategic foresight, navigate uncertainty, drive transformative change, and build individual and organizational resilience, ensuring market dominance and excellence in public governance. He is the author of Brilliant Manoeuvres: How to Use Military Wisdom to Win Business Battles. He is also the developer of Worldview Warfare and Strategic Epistemology, a groundbreaking methodology that focuses on understanding beliefs, values, and strategy in a world of conflict, competition, and cooperation.
© 2025 Richard Martin
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