Canadians face massive uncertainly and turbulence in 2025

As the new year beckons, Canadian policymakers, workers and consumers are staring at a turbulent and uncertain economic landscape. While the economy has been growing, the population has been increasing faster—leading to a two-year slide in economic output and real income, measured on a per-person basis. The result has been a visible decline in Canadian living standards amid a largely stagnant economy.

Looking ahead to 2025, Canada faces two big uncertainties. The first is linked to the return of Donald Trump who has made a host of jaw-dropping promises including a pledge to slap a 25 per cent tariff on all merchandise imports from Canada and Mexico on day one of his administration. Should he follow through with that plan, our economy will be plunged into recession.

Last year, Canada sold $593 billion of goods to the United States, along with more than $85 billion in “services,” together representing more than three-quarters of our total international exports. The Canadian industries that will take the biggest hit from possible Trumpian tariffs include energy, automobile and parts manufacturing, wood products, all types of machinery and equipment, consumer products, minerals and metals and agri-food.

While the threatened across-the-board tariffs may never materialize, it’s a safe bet that Trump’s presidency portends rocky times for the Canada-U.S. relationship. The near-certainty of increased U.S. restrictions on Canadian exports, coupled with the likelihood of tax cuts and sweeping regulatory reforms, means many larger and mid-sized Canadian companies will be tempted to redirect their capital and business growth ambitions to the south, thereby dampening domestic investment. In response, governments in Ottawa and the provinces should urgently improve the environment for investment at home.

Another source of economic uncertainty is the federal government’s decision to ratchet back immigration. Ottawa’s about-face on immigration ranks as one of the most dramatic reversals of Canadian public policy in half a century. Under the Trudeau Liberals, Canada has become wholly reliant on immigration-fuelled labour-force growth to drive the economy, as productivity—the other key contributor to long-term economic growth—has stalled. Higher immigration has indeed boosted economic activity, albeit without delivering gains in per-person income.

Now, federal policymakers intend to cut permanent immigration, impose sharp curbs on international students, and somehow engineer the departure of 1.3 million temporary residents currently living in Canada—all over the next two years. Exactly how and to what extent this will play out is unclear. After three years of rapid population growth, Canada could experience a flat or even slightly declining population. Lower immigration is necessary after a period of almost uncontrolled inflows, but zero or negative population growth will detract from economy-wide spending and put a dent in labour supply. The outcome will be slower economic growth in 2025-26 than otherwise would be the case.

Closer to home, the Trudeau government presides over a structurally weak economy where much of the growth has been coming from a ballooning public sector while large swathes of the business community shrink or sit on the sidelines. On Trudeau’s watch, government debt has soared, business investment has been chronically sluggish, and Canada’s ranking on surveys of global competitiveness has dropped. We can do better.

Rather than continuing to expand the size of government, policymakers should aim to revitalize the private-sector economy that still produces most of the country’s output and accounts for the bulk of Canada’s jobs, exports and innovations.

Jock Finlayson

Senior Fellow, Fraser Institute

Related Topics:#CanadaEconomy #CanadaImmigration #FraserInstitute #JockFinlayson feature TrumpTariffs USCanada

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Worst kept secret—red tape strangling Canada’s economy

Published on February 22, 2025

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From the Fraser Institute

By Matthew Lau

In the past nine years, business investment in Canada has fallen while increasing more than 30 per cent in the U.S. on a real per-person basis. Workers in Canada now receive barely half as much new capital per worker than in the U.S.

According to a new Statistics Canada report, government regulation has grown over the years and it’s hurting Canada’s economy. The report, which uses a regulatory burden measure devised by KPMG and Transport Canada, shows government regulatory requirements increased 2.1 per cent annually from 2006 to 2021, with the effect of reducing the business sector’s GDP, employment, labour productivity and investment.

Specifically, the growth in regulation over these years cut business-sector investment by an estimated nine per cent and “reduced business start-ups and business dynamism,” cut GDP in the business sector by 1.7 percentage points, cut employment growth by 1.3 percentage points, and labour productivity by 0.4 percentage points.

While the report only covered regulatory growth through 2021, in the past four years an avalanche of new regulations has made the already existing problem of overregulation worse.

The Trudeau government in particular has intensified its regulatory assault on the extraction sector with a greenhouse gas emissions cap, new fuel regulations and new methane emissions regulations. In the last few years, federal diktats and expansions of bureaucratic control have swept the auto industry, child care, supermarkets and many other sectors.

Again, the negative results are evident. Over the past nine years, Canada’s cumulative real growth in per-person GDP (an indicator of incomes and living standards) has been a paltry 1.7 per cent and trending downward, compared to 18.6 per cent and trending upward in the United States. Put differently, if the Canadian economy had tracked with the U.S. economy over the past nine years, average incomes in Canada would be much higher today.

Also in the past nine years, business investment in Canada has fallen while increasing more than 30 per cent in the U.S. on a real per-person basis. Workers in Canada now receive barely half as much new capital per worker than in the U.S., and only about two-thirds as much new capital (on average) as workers in other developed countries.

Consequently, Canada is mired in an economic growth crisis—a fact that even the Trudeau government does not deny. “We have more work to do,” said Anita Anand, then-president of the Treasury Board, last August, “to examine the causes of low productivity levels.” The Statistics Canada report, if nothing else, confirms what economists and the business community already knew—the regulatory burden is much of the problem.

Of course, regulation is not the only factor hurting Canada’s economy. Higher federal carbon taxes, higher payroll taxes and higher top marginal income tax rates are also weakening Canada’s productivity, GDP, business investment and entrepreneurship.

Finally, while the Statistics Canada report shows significant economic costs of regulation, the authors note that their estimate of the effect of regulatory accumulation on GDP is “much smaller” than the effect estimated in an American study published several years ago in the Review of Economic Dynamics. In other words, the negative effects of regulation in Canada may be even higher than StatsCan suggests.

Whether Statistics Canada has underestimated the economic costs of regulation or not, one thing is clear: reducing regulation and reversing the policy course of recent years would help get Canada out of its current economic rut. The country is effectively in a recession even if, as a result of rapid population growth fuelled by record levels of immigration, the GDP statistics do not meet the technical definition of a recession.

With dismal GDP and business investment numbers, a turnaround—both in policy and outcomes—can’t come quickly enough for Canadians.

Matthew Lau

Adjunct Scholar, Fraser Institute

Business

‘Out and out fraud’: DOGE questions $2 billion Biden grant to left-wing ‘green energy’ nonprofit`

Published on February 22, 2025

Todayville

From LifeSiteNews

By Calvin Freiburger

The EPA under the Biden administration awarded $2 billion to a ‘green energy’ group that appears to have been little more than a means to enrich left-wing activists.

The U.S. Environmental Protection Agency (EPA) under the Biden administration awarded $2 billion to a “green energy” nonprofit that appears to have been little more than a means to enrich left-wing activists such as former Democratic candidate Stacey Abrams.

Founded in 2023 as a coalition of nonprofits, corporations, unions, municipalities, and other groups, Power Forward Communities (PFC) bills itself as “the first national program to finance home energy efficiency upgrades at scale, saving Americans thousands of dollars on their utility bills every year.” It says it “will help homeowners, developers, and renters swap outdated, inefficient appliances with more efficient and modernized options, saving money for years ahead and ensuring our kids can grow up with cleaner, pollutant-free air.”

The organization’s website boasts more than 300 member organizations across 46 states but does not detail actual activities. It does have job postings for three open positions and a form for people to sign up for more information.

The Washington Free Beacon reported that the Trump administration’s Department of Government Efficiency (DOGE) project, along with new EPA administrator Lee Zeldin, are raising questions about the $2 billion grant PFC received from the Biden EPA’s National Clean Investment Fund (NCIF), ostensibly for the “affordable decarbonization of homes and apartments throughout the country, with a particular focus on low-income and disadvantaged communities.”

PFC’s announcement of the grant is the organization’s only press release to date and is alarming given that the organization had somehow reported only $100 in revenue at the end of 2023.

“I made a commitment to members of Congress and to the American people to be a good steward of tax dollars and I’ve wasted no time in keeping my word,” Zeldin said. “When we learned about the Biden administration’s scheme to quickly park $20 billion outside the agency, we suspected that some organizations were created out of thin air just to take advantage of this.” Zeldin previously announced the Biden EPA had deposited the $20 billion in a Citibank account, apparently to make it harder for the next administration to retrieve and review it.

“As we continue to learn more about where some of this money went, it is even more apparent how far-reaching and widely accepted this waste and abuse has been,” he added. “It’s extremely concerning that an organization that reported just $100 in revenue in 2023 was chosen to receive $2 billion. That’s 20 million times the organization’s reported revenue.”

Daniel Turner, executive director of energy advocacy group Power the Future, told the Beacon that in his opinion “for an organization that has no experience in this, that was literally just established, and had $100 in the bank to receive a $2 billion grant — it doesn’t just fly in the face of common sense, it’s out and out fraud.”

Prominent among PFC’s insiders is Abrams, the former Georgia House minority leader best known for persistent false claims about having the state’s gubernatorial election stolen from her in 2018. Abrams founded two of PFC’s partner organizations (Southern Economic Advancement Project and Fair Count) and serves as lead counsel for a third group (Rewiring America) in the coalition. A longtime advocate of left-wing environmental policies, Abrams is also a member of the national advisory board for advocacy group Climate Power.