Business investment key to addressing Canada’s productivity crisis

The Bank of Canada’s senior deputy governor Carolyn Rogers recently raised the alarm on Canada’s productivity crisis, saying “it’s an emergency—it’s time to break the glass.” But to address Canada’s productivity problem, which is contributing to our stagnant living standards, we must first address Canada’s weak business investment.

For perspective, Canada’s economic growth in the fourth quarter of 2023, as measured by per-person GDP, a common indicator of living standards, was $58,111, which is slightly less than it was at the end of 2014 at $58,162 (after adjusting for inflation). That means that over roughly the last decade, Canadian living standards have not increased. Indeed, our economic problems span well beyond the pandemic. In the five years prior to 2019 (the last pre-COVID year), Canada’s per-person GDP (inflation-adjusted) was the 4th weakest out of 38 advanced countries.

Unfortunately, prospects for the future are dim. According to the OECD, Canada will record the lowest rate of per-person GDP growth among 32 advanced economies over roughly the next 40 years. Countries such as Estonia, South Korea and New Zealand are expected to pass Canada and achieve higher living standards by 2060.

Given that growth in productivity—essentially, the value of economic output per hour of work—is key to higher living standards, it’s no surprise that Rogers and other analysts are raising alarms. But what’s at the heart of our productivity crisis?

Put simply, weak business investment. While the federal and many provincial governments have prioritized immigration and bigger government in an effort to stimulate productivity growth and grow our economy, they’ve ignored business investment, which has significantly declined in recent years.

From 2014 to 2022, inflation-adjusted total business investment (in plants, machinery, equipment and new technologies but excluding residential construction) in Canada declined by C$34 billion. During the same time period, after adjusting for inflation, business investment per worker declined (on average) by 2.3 per cent annually. In contrast, business investment per worker grew (on average) by 2.8 per cent annually from 2000 to 2014.

While business investment has generally declined in Canada since 2014, in other countries, including the United States, it’s continued to grow. As a result, Canada’s GDP per hour worked—a key measure of productivity growth—is among the lowest in the OECD.

Think of it this way; when businesses invest in physical and intellectual capital they equip workers with the tools and technology (e.g. machinery, computer programs, artificial intelligence) to produce more and provide higher quality goods and services, which fuels innovation and higher productivity. Because Canada has lower levels of investment in tools and technology, our workers are less productive.

But here’s the good news. Governments across Canada can enact policies to help stimulate business investment, productivity gains, and ultimately, stronger economic growth. The key is to reduce onerous regulations, rein in high government spending, and create a pro-growth tax environment that makes Canada a more attractive place for business to locate and invest. These policies have a proven track record of improving business investment in Canada. For its part, the Trudeau government can prioritize pro-growth policies when it tables the federal budget next week.

Clearly, without a change in the investment climate and stronger productivity growth, the economic outlook looks grim. Fortunately, Canadian governments can respond to this emergency with pro-growth policy reform.

Author:

Tegan Hill

Associate Director, Alberta Policy, Fraser Institute

Up Next

Federal government remains intransigent on emissions cap despite dire warnings of harm

Don't Miss

Federal budget fails to ‘break the glass’ on Canada’s economic growth crisis

Todayville

Todayville is a digital media and technology company. We profile unique stories and events in our community. Register and promote your community event for free.

Follow Author

FBI’s Dan Bongino may resign after dispute about Epstein files with Pam Bondi

National / 9 hours ago

How Long Will Mark Carney’s Post-Election Honeymoon Last? – Michelle Rempel Garner

Business / 10 hours ago

Trump confirms 35% tariff on Canada, warns more could come

Business

Trump confirms 35% tariff on Canada, warns more could come

Published on July 11, 2025

Todayville

MxM News

Quick Hit:

President Trump on Thursday confirmed a sweeping new 35% tariff on Canadian imports starting August 1, citing Canada’s failure to curb fentanyl trafficking and retaliatory trade actions.

Key Details:

In a letter to Canadian Prime Minister Mark Carney, Trump said the new 35% levy is in response to Canada’s “financial retaliation” and its inability to stop fentanyl from reaching the U.S.
Trump emphasized that Canadian businesses that relocate manufacturing to the U.S. will be exempt and promised expedited approvals for such moves.
The administration has already notified 23 countries of impending tariffs following the expiration of a 90-day negotiation window under Trump’s “Liberation Day” trade policy.

Diving Deeper:

President Trump escalated his tariff strategy on Thursday, formally announcing a 35% duty on all Canadian imports effective August 1. The move follows what Trump described as a breakdown in trade cooperation and a failure by Canada to address its role in the U.S. fentanyl crisis.

“It is a Great Honor for me to send you this letter in that it demonstrates the strength and commitment of our Trading Relationship,” Trump wrote to Prime Minister Mark Carney. He added that the tariff response comes after Canada “financially retaliated” against the U.S. rather than working to resolve the flow of fentanyl across the northern border.

Trump’s letter made clear the tariff will apply broadly, separate from any existing sector-specific levies, and included a warning that “goods transshipped to evade this higher Tariff will be subject to that higher Tariff.” The president also hinted that further retaliation from Canada could push rates even higher.

However, Trump left the door open for possible revisions. “If Canada works with me to stop the flow of Fentanyl, we will, perhaps, consider an adjustment to this letter,” he said, adding that tariffs “may be modified, upward or downward, depending on our relationship.”

Canadian companies that move operations to the U.S. would be exempt, Trump said, noting his administration “will do everything possible to get approvals quickly, professionally, and routinely — In other words, in a matter of weeks.”

The U.S. traded over $762 billion in goods with Canada in 2024, with a trade deficit of $63.3 billion, a figure Trump called a “major threat” to both the economy and national security.

Speaking with NBC News on Thursday, Trump suggested even broader tariff hikes are coming, floating the idea of a 15% or 20% blanket rate on all imports. “We’re just going to say all of the remaining countries are going to pay,” he told Meet the Press moderator Kristen Welker, adding that “the tariffs have been very well-received” and noting that the stock market had hit new highs that day.

The Canadian announcement is part of a broader global tariff rollout. In recent days, Trump has notified at least 23 countries of new levies and revealed a separate 50% tariff on copper imports.

“Not everybody has to get a letter,” Trump said when asked if other leaders would be formally notified. “You know that. We’re just setting our tariffs.”

Business

Trump slaps Brazil with tariffs over social media censorship

Published on July 11, 2025

Todayville

From LifeSiteNews

By Dan Frieth

In his letter dated July 9, 2025, addressed to President Luiz Inácio Lula da Silva, Trump ties new U.S. trade measures directly to Brazilian censorship.

U.S. President Donald Trump has launched a fierce rebuke of Brazil’s moves to silence American-run social media platforms, particularly Rumble and X.

In his letter dated July 9, 2025, addressed to President Luiz Inácio Lula da Silva, Trump ties new U.S. trade measures directly to Brazilian censorship.

He calls attention to “SECRET and UNLAWFUL Censorship Orders to U.S. Social Media platforms,” pointing out that Brazil’s Supreme Court has been “threatening them with Millions of Dollars in Fines and Eviction from the Brazilian Social Media market.”

Trump warns that these actions are “due in part to Brazil’s insidious attacks on Free Elections, and the fundamental Free Speech Rights of Americans,” and states: “starting on August 1, 2025, we will charge Brazil a Tariff of 50% on any and all Brazilian products sent into the United States, separate from all Sectoral Tariffs.” He also adds that “Goods transshipped to evade this 50% Tariff will be subject to that higher Tariff.”

Brazil’s crackdown has targeted Rumble after it refused to comply with orders to block the account of Allan dos Santos, a Brazilian streamer living in the United States.

On February 21, 2025, Justice Alexandre de Moraes ordered Rumble’s suspension for non‑compliance, saying it failed “to comply with court orders.”

Earlier, from August to October 2024, Moraes had similarly ordered a nationwide block on X.

The court directed ISPs to suspend access and imposed fines after the platform refused to designate a legal representative and remove certain accounts.

Elon Musk responded: “Free speech is the bedrock of democracy and an unelected pseudo‑judge in Brazil is destroying it for political purposes.”

By linking censorship actions, particularly those targeting Rumble and X, to U.S. trade policy, Trump’s letter asserts that Brazil’s judiciary has moved into the arena of foreign policy and economic consequences.

The tariffs, he makes clear, are meant, at least in part, as a response to Brazil’s suppression of American free speech.

Trump’s decision to impose tariffs on Brazil for censoring American platforms may also serve as a clear signal to the European Union, which is advancing similar regulatory efforts under the guise of “disinformation” and “online safety.”

With the EU’s Digital Services Act and proposed “hate speech” legislation expanding government authority over content moderation, American companies face mounting pressure to comply with vague and sweeping takedown demands.

By framing censorship as a violation of U.S. free speech rights and linking it to trade consequences, Trump is effectively warning that any foreign attempt to suppress American voices or platforms could trigger similar economic retaliation.

Reprinted with permission from Reclaim The Net.