Prime Minister Mark Carney has unveiled a controversial new 'Buy Canadian' procurement policy that prioritizes domestic suppliers for federal government spending. The announcement, made on Monday, November 10, 2025, at a manufacturing facility in Fredericton, New Brunswick, signals a significant shift in Canada's approach to trade and economic development.
The New Protectionist Push
Under the new initiative, the federal government will allocate nearly $186 million in new funding to support Canadian businesses in securing federal contracts. Carney declared, 'We will build Canadian, by becoming our own best customer,' emphasizing that the policy will include streamlined support for small and medium-sized enterprises trying to access the federal marketplace. The policy coincides with a second set of national 'major projects' that Carney plans to announce later this week.
Economic Consequences of Protectionism
While the policy appears patriotic on the surface, economic analysts warn it represents a dangerous retreat from free trade principles that have historically benefited Canada. The 'Buy Canadian' doctrine effectively guarantees markets for domestic companies regardless of their efficiency or innovation levels. This approach risks breeding corporate complacency, reducing the drive to cut costs and innovate, while potentially increasing consumer prices.
Canada already has several examples of protectionist policies leading to negative outcomes for consumers. The Big Six banks and telecom monopolies, sheltered from foreign competition for decades, have resulted in Canadians paying billions in excess bank fees and some of the world's highest telecommunications costs. Similarly, supply management policies in agriculture have kept foreign competition out while raising prices for staples like milk and eggs.
Procurement Pitfalls and Productivity Concerns
The policy also raises concerns about potential graft and waste in government procurement. The $59 billion ArriveCan scandal demonstrated how procurement guidelines requiring contracts to go to specific types of businesses can be exploited, with companies pretending to be Indigenous-owned to secure deals. Ottawa's entire IT procurement system has previously been criticized for lacking supplier diversity.
Most critically, trade barriers of any kind - even those disguised as patriotic procurement policies - threaten to further damage Canada's already struggling productivity. The Bank of Canada has emphasized that a more competitive business environment drives innovation and efficiency, particularly for the same small and medium-sized businesses that Carney's policy aims to support. Canada's productivity problem requires more competition, not less.
Historical evidence supports the benefits of free trade. The Bank of Canada found that real income rose by 15-40 percent following Canada-U.S. free trade implementation. Canada remains the top export market for 36 U.S. states, supporting millions of American jobs. The much-discussed U.S. trade deficit with Canada stems entirely from energy imports that America has enjoyed at below-market rates for decades, fueling their domestic industries from manufacturing to artificial intelligence.
