A study released by the Montreal Economic Institute estimates the federal government’s “Buy Canadian” policy could increase the cost of large infrastructure projects by more than $12 billion per year.
The study states that, among Organization for Economic Co-operation and Development (OECD) countries, total expenditures on public procurement accounted for 12.9 per cent of gross domestic product in 2021.
In Canada, that number was slightly higher, at 13.4 per cent, highlighting how the Canadian government’s purchases of goods and services are a significant part of the Canadian economy, larger than the OECD average.
The study states that following trade tensions between Canada and the U.S., Canada had only engaged in public procurement “more sparingly.”
Now, with Canada’s new policy, this practice has grown in Canada due to public procurement, which refers to “the purchase by governments and state-owned enterprises of goods, services and works.”
'Procurement protectionism exacerbates this problem'
The study states that the “Buy Canadian” policy “creates tighter controls to avoid tariff jumping,” which refers to foreign firms avoiding tariffs by establishing a formal local presence.
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As a result, the study finds that the federal policy “proposes a form of bid preference whereby Canadian suppliers are treated as being cheaper for the purpose of evaluating their bids.”
It is also noted that provincial governments have engaged with “similar types of procurement protectionism.”
The study references a program created in California that offered resident small businesses a five per cent bid preference over non-resident firms. As a result, total procurement costs rose on these projects by 3.6 per cent, while larger firms that were more competitive left the market.
Therefore, it is suggested that Canada could adopt a system similar to California’s for all procurement spending. It is estimated that costs per Canadian would increase between $124 and $320.
In addition, the study suggests that “as governments grow larger, individual accountability weakens, responsibility becomes more diffuse, and coordination among monitors deteriorates, all of which increases the scope for corrupt behaviour.”
“Procurement protectionism exacerbates this problem, as less competition means larger possible rents for winning firms, which can in turn offer to share some of the spoils with politicians and bureaucrats,” the study states.
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“Procurement protectionism ends up reducing competition for bids, leading to costlier projects and less efficient results. In the end, taxpayers and service consumers are left worse off.”
What is the 'Buy Canadian' policy?
Enacted in December 2025, the policy aims to make “Canada its own best customer by strengthening domestic industries, supporting Canadian workers, and building a more resilient and diversified economy in a rapidly changing global trade environment.”
The policy currently applies to “large, strategic procurements valued at $25 million and over,” and will “expand to contracts valued at $5 million and above by spring 2026.”
With “Buy Canadian” in action, the federal government states that it is “leveraging federal procurement as a strategic economic tool, the Buy Canadian Policy strengthens Canada’s industrial capacity, supports domestic workers and businesses, and positions Canada to compete more effectively in global markets, now and for the long term.”
I’ve regrouped my e-commerce global to one singular focus and would like any further virtual/enews and suggestions to my started up company that I’ve designed with my time off from work. -Tevin Ponder {teatevinponder@gmail.com}
$12 billion a year?
Just add it to our $1.3 trillion hyperinflation inducing national debt black hole.
I fail to see how keeping investment in Canadian companies in any form is worse. Please educate me.
Even if on paper it is $12 billion more, it is money that is staying in Canada. Money that will support secondary and tertiary industries, as well as service businesses, keeping Canadians employed.
I am a little shocked tbh how nobody working on this article considered a simple thing like the multiplier effect, or as arcane as investments in local expertise that build a foundation good for the next 40 years.
This is highly amateur writing and analysis.
What ever is the best price. To many with there elbows stuck up you now where.
This is the cost of letting domestic industry infrastructure decline in the first place.
We keep trying to balance budgets by austerity precipitated by lowering taxes and that erodes our capacity.
I now have to know how everything works and how to troubleshoot just so I can function in society because every company & government has cut customer/civic service. That’s before I even show up for the work I get paid to do.
What a pain.
And Brookfield will get 80% for it
So look what it is costing the Americans to cut us out and follow their new policy! We are the lucky ones and it would cost us a lot more if we didn’t support our own products!
The MEC is a highly acclaimed and respected firm. They aren’t scaremongering, but simply reporting the truth. My boyfriend Roy fully agrees with me.
Alfred E. Newman below is an idiot, clearly.
Scaremongering from a quisling pseudo “think tank”.
Pfffffffffffft.
Buy Canadian? How about hire Canadian!
That’s what happens when you buy empty slogans like “Elbows Up”
Peanuts!!
If the saying, “Cut off your nose to spite your face” was a country, it would be Canada.
I don’t care. My money is safe overseas. And the Canadian Debt Clock is currently at $1.292 TRILLION!! LOL suckers!
People will shop in stores and companies that gives the best prices. Canadians only have so much income to spend after all the taxes are taken.
However, money spent in Canada provides payroll for Canadians which is taxed. Profits made in Canada are taxed. Money spent by workers in Canada is taxed. How much of the procurement money is returned in taxes?
Elbows up Losers
The only way to make life more affordable for Canadians is to axe all carbon and packaging taxes for a start.