Our Northern Neighbor Heading South?

President Trump received a lot of attention early in his Presidency by suggesting that Canada should join the United States as its 51st state.

Trump started saying this after former Prime Minister Justin Trudeau told Trump that if the United States levied a large tariff on goods it exports to the United States that Canada would cease to exist as a country.

Trump then concluded...

"If Canada cannot exist without being reliant on the United States market perhaps it would make sense for Canada to become a state. There would then be no tariffs going either way."

Most dismissed this as mere hyperbole to be used as a negotiating tactic to get Canada to agree to a trade agreement that is more advantageous for the United States.

Trump is prone to hyperbole.

However, the reality is that Canada is facing more and more problems which points to a nation in trouble.

Is our northern neighbor headed south?

It might not eventually become part of the United States but Canada is heading south from a number of perspectives.

Consider GDP per capita.

Canada is going nowhere while the United States surges.

The United States is projected to have GDP growth as high as 5.4% in the fourth quarter, 2025.

Canada's economy was on track to actually shrink in the fourth quarter.

One economist described Canada's economy as being on 'life support'.

The Canadian dollar has also declined massively vs. the U.S. dollar over the last 15 years.

Source: https://ca.finance.yahoo.com/quote/CADUSD%3DX/

In 2011, you could get $1.05 Canadian for $1 US dollar.

The Canadian dollar is only worth 73 cents today---a devaluation of 30%.

Every Canadian has gotten poorer vs. Americans.

Manufacturing activity in Canada is also significantly lagging the United States.

Credit: https://x.com/KatKanada_TM/status/2020293125714112684

Canada is not just doing poorly compared to the United States.

Over the last decade it has lagged all of the major OECD economies.

The future also does not look very bright for Canada.

Business investment has fallen off a cliff compared to the United States.

Canadians are also not having children.

Births in Canada are now lower than in Europe which is low to begin with.

10 years ago, when the Liberals took over in Canada, they decided that the best way to grow was to open the floodgates to immigrants.

The immigration does not appear to have helped the economy but it will undeniably change the demographics and culture of Canada for the future.

Almost 30% of the population of Canada today was born outside the country.

In Toronto, that number is 47% and in Vancouver it is 42% according to recent estimates. 

By comparison, the percentage of foreign-born in the United States today is 15% which is the highest that it has ever been in the long history of the country.

Housing prices increased dramatically as supply could not compete with the demand created by all of the immigrants.

As a result, price-income ratios soared past all of the other OECD countries even though housing prices have recently started to fall.

The average house price in Canada today is 8x the average income.

That is at least twice what it should be.

All of that home mortgage debt means that Canada has a huge amount of household debt compared to the size of its economy.

How does Canada dig out from under this pile of debt?

Despite the fact that Canada is totally dependent on the United States for its defense, 77% of its exports and 20% of its GDP is tied to exports to the United States, Canadians elected another Liberal as Prime Minister on the promise he would stand up to Trump.

That strategy is not working out very well for the Canadians thus far.

Mark Carney has been no better than Justin Trudeau.

The reality is that Canada has no real leverage in any negotiations with the United States.

To make matters worse, in an area where Canada has an advantage, it is shooting itself in the foot.

It is the only nation in the Top 10 oil producers that levies a carbon tax on its use.

Production and jobs in key sectors that export to the United States such as autos, metals and forestry have seen production drops which is also straining employment in these industries.

Source: https://www.automotiveworld.com/news/gm-cuts-500-canada-jobs-moves-production-back-to-us/

Source: https://www.nytimes.com/2025/10/15/world/canada/stellantis-auto-production-canada-us-trump-tariffs.html

Add to all of this an increasing amount of political discontent that has provinces such as Alberta seeing active movements promoting separation from Canada.

A petition drive is underway right now in Alberta to put a referendum vote on separation before the people of the province. 177,732 valid signatures (about 10% of registered voters) are necessary by May 2, 2026 to force the provincial government to hold the referendum vote. 

If the petition drive is successful the vote would be held as early as October, 2026.

Even a clear majority vote would not mean that Alberta could secede. It would just mean that Canada would have to enter into negotiations with the province on its grievances.

Recent polls show that the petition drive will likely succeed in getting the referendum vote on the ballot  but the majority of Albertans still favor remaining as a part of Canada right now.

However, it should be noted that Quebec, British Columbia and Saskatchewan alos all have separation movements of some kind that are active.

Source: https://x.com/RiseOfAlberta/status/2020327406498902070

There is clearly a lot of political unrest and dissension in Canada.

I don't expect Alberta or another province to be able to secede and become an independent country, or to join the United States, as the Canadian constitution requires all the other provinces must agree to separation. 

The other provinces are deriving too much economic benefit from Alberta and Saskatchewan to let them separate in the near future.

Alberta and Saskatchewan have 95% of Canada's oil and gas reserves and 75% of its farmland.

However, I do foresee a period of turmoil and tumult for Canada as a result of the policies that the Liberals in that country continue to pursue.

Unless Canada's leadership does a course correction on its liberal policies and attitude towards Trump and the United States, it is headed further south.

We may not see Canada become the 51st state but it might not be far-fetched that we will see the country implode or split apart in the longer term due to its economy and its worsening social and political divisions.

What is really sad is that the majority in Canada seem to want to blame Donald Trump for their problems when the reality is that they have done this to themselves by following the wrong leaders and the wrong policies.