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Reason Foundation

Understandably, "Buy Canada" Laws Are Troubling

Anthony Randazzo
August 17, 2009, 4:15pm

Last week, the city council of Marystown, Newfoundland in our red-leafed neighbor to the north passed a resolution pledging to only buy Canadian-made products. Understandably, this is a problem for American businesses. It's bad for Canada too.

A "Buy Canada" law artificially inflates the price of goods in the country, or at least the region around Marystown. This may help businesses in the short-term, but it decreases individual income and ultimately reduces consumption. It also hurts consumers by reducing the potential for innovation, as Canadian businesses are shielded from outside ideas for new products and delivery of services. Seriously, no one in Marystown wants an iPhone?

American businesses can look at this protectionism and see the problems with it easily, especially the problems it poses for those who seek to sell their products in Canada. Like the company selling iPhone gloves. We want there to be fair opportunities to compete for business both in Maine and Newfoundland. What is the difference between people in Ontario and North Dakota? Why should an invisible line across the (often frozen) plains keep some from buying the best priced product available?

This should make the "Buy American" laws proposed and passed seem just as ridiculous as a "Buy Canada" law. Sure we have the iPhone here, so maybe it's an easier life living under "Buy American", but how do you know that iPhone is really American-made in the first place. The iPod has parts made in dozens of countries not called the United States of America. Probably only the Thiphone would pass the local parts test. And even then it might be made in China.


Anthony Randazzo is Director of Economic Research


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