From the Frontier Centre for Public Policy

By Ian Madsen

From telecom ownership limits to convoluted regulations, these hidden obstacles drive up prices, choke innovation, and shield domestic industries from global competition. Canada ranks among the worst offenders. If Ottawa is serious about free trade, it’s time to tackle the red tape, not just the tariffs.

Governments claim to support free trade, but use hidden rules to shut out foreign competition

Tariffs levied by governments on imports are a well-known impediment to trade. They raise costs for consumers and businesses alike. But tariffs are no longer the main obstacle to the elusive goal of “free and fair trade.” A more significant—and often overlooked—threat comes from non-tariff barriers: the behind-the-scenes rules, subsidies and restrictions that quietly block competition from foreign exporters.

These barriers can take many forms, including import licences, quotas, discriminatory regulations and state subsidies. The result is often higher prices, limited product choices and reduced innovation, since foreign competitors are effectively shut out of the market before they can enter.

This hidden protectionism harms both consumers and Canadian firms that rely on imported goods or global supply chains.

To understand the global scope of these barriers, a recent analysis by the Tholos Foundation sheds light on their prevalence and impact. Its 2023 Non-Tariff Barriers Index Report examined the policies, laws and trade practices of 88 countries, representing 96 per cent of the world’s population and GDP.

The results are surprising: the United States, with some of the lowest official tariffs, ranked 65th on non-tariff barriers. Canada, by contrast, ranked fourth.

These barriers are often formalized and tracked under the term “non-tariff measures” by international organizations such as the United Nations Conference on Trade and Development (UNCTAD) and the World Trade Organization.

UNCTAD notes that while some serve legitimate non-trade objectives like public health or environmental protection, they still raise trade costs through procedural hurdles that can disproportionately affect small exporters or developing nations.

Other barriers include embargoes, import deposits, subsidies to favoured companies, state procurement preferences, technical standards designed to exclude foreign goods, restrictions on foreign investment, discriminatory taxes and forced technology transfers.

Many of these are detailed in a study by the Leibniz Institute for Economic Research at the University of Munich.

Sanctions and politically motivated trade restrictions also fall under this umbrella, complicating efforts to build reliable global trade networks.

Among the most opaque forms of trade distortion is currency manipulation. Countries like Japan have historically used ultra-low interest rates to stimulate growth, which also weakens their currencies.

Others may unintentionally devalue their currency through excessive, debt-financed spending. Regardless of motive, the effect is often the same: foreign goods become more expensive, and domestic exports become artificially competitive.

Canada is no stranger to non-tariff barriers. Labelling laws, technical standards and foreign ownership restrictions, particularly in telecommunications and digital media, are clear examples. Longstanding rules prevent foreign companies from owning Canadian telecom providers, limiting competition in an industry where Canadians already pay among the highest cellphone bills in the world. Similar restrictions on investment in broadcasting and interactive digital media also curtail innovation and investment.

Other nations use these barriers just as liberally. The U.S. has expanded its use of the “national security” exemption to justify restrictions in nearly any industry it sees as threatened. The European Union employs a wide range of non-tariff measures that affect sectors from agriculture to digital services. So while China is frequently criticized for abusing trade rules, it is far from the only offender.

If governments are serious about pursuing freer, fairer global trade, they must confront these less visible but more potent barriers. Tariffs may be declining, but protectionism is alive and well, just hidden behind layers of red tape.

For Canada to remain competitive and protect consumers, we must look beyond tariffs and scrutinize the subtler ways the federal government is restricting trade.

Ian Madsen is a senior policy analyst at the Frontier Centre for Public Policy.

MxM News

Quick Hit:

Inflation dropped to its lowest level in over four years in April, marking the third straight month of better-than-expected consumer data. The White House says President Trump’s economic policies are driving a “Golden Age” of falling prices and rising wages for American workers.

Key Details:

• Grocery prices fell by the largest margin in nearly five years, while egg prices plunged 12.7%—the steepest one-month drop since 1984.

• Gas prices fell for a third consecutive month, contributing to broader declines in energy and transportation costs.

• Real wages are up 1.9% year-over-year, with steady growth over the last three months giving workers more buying power.

JUST IN: April’s inflation report came in below expectations for the third straight month.

Grocery prices saw their largest decline in nearly five years.

Gas prices fell for the third month in a row. pic.twitter.com/AgsyV6efkF

— Rapid Response 47 (@RapidResponse47) May 13, 2025

Diving Deeper:

The Consumer Price Index report for April, released Tuesday, shows inflation easing to a four-year low—the strongest evidence yet that President Trump’s economic policies are reversing years of price pressure on American families.

“Inflation has fallen to the lowest level in more than four years as April’s Consumer Price Index smashes expectations for the third straight month in President Donald J. Trump’s Golden Age,” the White House said in a statement.

Prices for essentials saw some of the sharpest declines in years:

• Grocery prices were down 0.4% in April, while egg prices dropped 12.7%, “the most since 1984,” Bloomberg reported.

• Airfare, hotel rates, used vehicles, and energy costs all declined compared to a year ago.

• Workers’ real wages rose for the third straight month, climbing 1.9% over the past year.

Mainstream media outlets that previously warned of Trump’s tariff-driven inflation are now acknowledging the downturn. Fox Business Network’s Maria Bartiromo noted: “Oil is down, eggs are down, food is down. We’re seeing that reflected, so all that hysteria over tariffs is not showing up in these numbers.”

Investopedia’s Caleb Silver added, “The smoke was much worse than the fire… That drop in gasoline and energy prices—a big deal.”

NBC’s Brian Cheung said the report was “pretty solid,” and Bloomberg highlighted that “grocery prices were down 0.4% on the month… validating some of President Donald Trump’s messaging.”

The bottom line: prices are falling, paychecks are going further.