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Raging Fury's avatar

I would love to see an analysis on the benefits of becomeing a US state.

I know unpopular but perhaps not as daft as it is made out to be.

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David @ Design Talk's avatar

I haven't read it, but "Merger of the Century" by Diane Francis addressed the topic: https://g.co/kgs/H4QWgjk

That was published in 2014, so it feels like ancient history these days...

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Archie1954's avatar

Oh yes it is as daft as it is made out to be!

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Steve Mudge's avatar

On the other hand, if Trump continues the threats, California, Oregon, and Washington and some of the Eastern blue states could secede and join with Canada...heh, maybe.

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Ebenezer's avatar

I always thought Cascadia was a cool idea for a country.

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David @ Design Talk's avatar

It's an interesting and uncomfortable experience to have Tomas Pueyo turn his gaze to your country and meticulously dissect your sacred cows.

A couple thoughts:

- The fact that we have to think about the US invading Canada, or "lite" versions of aggression such as blockades, is really sad. So much has been achieved through peaceful cooperation over the years and both countries will now be worse off, although as Tomas rightly pointed out, Canada will be more affected than the US, given its smaller population.

- The silver lining is that Trump has jolted the country out of complacency, and hopefully this opportunity won't be lost. As many readers have already commented, the fact that we don't have free trade between Canadian regions is a scandal, but not one that is widely known. In fact, one of the hurdles in negotiating the CETA free trade agreement between Canada and the EU was that there was more standardization between the 25+ countries of the EU than the 10+ regions of Canada, despite the EU having more than 10x the Canadian population and many more languages to operate in. How could Canada let that happen?

Personally, I think think Canadians have a bad habit of looking at the US and all its craziness and feeling smug about our public health care and gun control, which means easy wins like Canada-wide free trade go unnoticed, or without the political urgency for improvement.

- While Tomas' suggestions are valuable, I can't help but think that:

1. Even if Canada implemented all of them, it still wouldn't be enough - on a geographic and economic level, we are just so massively exposed to the US

2. Some of the proposals e.g. developing mining resources that are easily seized by an aggressive force, would make Canada an even more enticing target for the wrong kind of US leader

Still, thinking optimistically, if the country had a bigger population, was more productive and more united, that would act as a deterrent to US aggression, or make peaceful cooperation more attractive.

- The feelings around immigration have become much more negative in a lot of Western countries recently, and while Canada seems to have been one of the last holdouts, the mood has changed now, too. What I didn't know was that there was a similar negative mood in the 80s and 90s, with a strong increase in positive feelings about immigration starting around 1997. What happened then? As someone born in Canada in the late 80s who came of age around the year 2000, I was lucky enough to experience the very strong, society-wide positive feeling around immigration in Canada at that time, which seemed to be backed up by mostly good outcomes for both new immigrants and the existing population. Without commenting on how or why we got here, it's been very sad, and a bit disorienting, to see the sudden shift, and I hope we can change the tide again.

Thanks for another great article!

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Tomas Pueyo's avatar

Thanks!

I think we can put it in another way: Canada will be the US’s sidekick unless it figures out how to get immigration to work.

You can invade a 40M ppl country in a way that you can’t invade a 100M ppl country.

And CA could get to that number within the century if it tried hard.

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Markdk21's avatar

The question is the same question as always: what should we/they do (first)?

In this case, the answer is to stop and think.

1. Assess the actual level and urgency of the threat (i.e. define the problem(s) that need to be solved carefully)

2. Consider the options and the resources available

3. Come up with a sensible short term and long term plan

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Wally's avatar

I always view Canada as having more sacred cows than India - Selling water, the unelected Senate, a Prime Minister nobody ever gets to vote for except the people in his own riding, the CBC, the disasters that are its universities, and the ultimate sacred cow - the worst medical system in the western world!

All are these are why I left Canada 35 years ago...

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Tomas Pueyo's avatar

Thanks for sharing!

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Stacy's avatar

Canada doesn't need more immigration - it needs lower taxes so people can afford to have children. Importing more people from other cultures who don't assimilate is problematic on a multitude of levels and an issue that cannot be ignored. Diversity isn't a strength, but unity is.

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Tomas Pueyo's avatar

I hear you. I hope to tackle that in another article on immigration.

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Stacy's avatar

I really look forward to that :)

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Aaron's avatar

I don't see taxes as a major contributor to the unaffordability of having children. Housing affordability and childcare expenses are much more significant. That said, my understanding is that no country has significantly boosted its birth rate via financial supports and incentives (they're still worthwhile, however, for the increased well-being of children and their families).

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Markdk21's avatar

Unity is definitely a strength. Do you think the US has it at the moment?

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Mike Doherty's avatar

A couple of comments: (1) In a backhanded way, this post serves to underscore why the USA might want dominion over Canada; (2) All of the suggestions made for improving the economy ought to be done anyways. If you don't grow, you stagnate or die. (3) Without assimilating immigrants into the culture, there will always be friction over the value of immigration. I would argue that good governance is dependent on shared common values. Nice discussion Tomas.

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Ebenezer's avatar

As an American, I agree that Pueyo could do a better job of making the rhetorical case against annexation.

In opinion polls, the fraction of Americans who support military annexation of Canada is basically rounding error:

https://angusreid.org/wp-content/uploads/2025/03/2025.03.12_51_state.pdf

The simplest way to oppose annexation is to say: the American people didn't vote for this. Trump did not make Canada an issue during the campaign. He doesn't have the democratic mandate to beef with our friends to the north. Not only is this statement true, it also has the effect of driving a wedge between Trump and his supporters. (I'm seeing some rather demagogic Canadian rhetoric which has just the opposite effect, of assigning everyone in the US shared responsibility for Trump's Canada policy. If you want Americans to come to identify with Trump's Canada policy, this sort of rhetoric is an excellent idea.)

If Trump tried to force a military invasion, it would be no surprise if lots of American soldiers recognized this order as illegal, and chose not follow it. Refusing to invade Canada is an American tradition which dates back to 1812, when some US militiamen argued that their deployment in Canada went beyond their legal mandate.

If I was a Canadian strategist, I would focus on educating US troops on their obligations under international law. "Just following orders" wasn't an excuse for the Nazis, and it won't be an excuse for invading Canada.

The Department of Defense has been replacing the Judge Advocate-Generals in the US military who traditionally advise US troops on their legal obligations. So there is legitimate room for education here: https://www.military.com/daily-news/2025/02/24/people-are-very-scared-trump-administration-purge-of-jag-officers-raises-legal-ethical-fears.html

One idea is to work with the fired American JAGs to develop a free AI chatbot which helps educate soldiers about their legal obligations, so they can avoid being prosecuted by e.g. a future US administration. This could be a free Android, iOS, and web app that soldiers can use to query whether the order they received is legal or not. Of course, chatbots have their own problems -- maybe hiring the ex-JAGs in a nonprofit where they consult with soldiers is a better idea.

Finally, there's the point that any invasion would likely turn into a bloody and prolonged insurgency, and we all know how insurgencies went for the US in Iraq and Afghanistan.

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Markdk21's avatar

Thanks for pointing out the reality of the situation so that I don't have to. Power does not just come from military strength, it comes from the people who control the weapons. The Cold War ended with little actual bloodshed because those who controlled the weapons decided not to use them. Canada's strongest defence is the alliance that they have forged with the people of America.

If they really believed America was a threat, then the most important thing they could do would be to create strategic deterrence.

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Nora Jane Pope's avatar

Thank you Tomas for an outstanding article. I am the great-great-daughter of William Henry Pope, Father of Confederation for PEI. He supported free trade between the provinces and I hope I live to see the day when this is restored in Canada.

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AG's avatar

These solutions are nice in theory, but most of them will probably never be implemented. A lot of them were tried already, but were discarded as politically infeasible.

Joining the population centers might be a priority if we thought the US might actually invade, but otherwise doesn't make any sense, relative to just going YIMBY on our existing major cities.

The main reason people give for moving to Toronto or Vancouver is for jobs. There isn't really a startup scene in Canada, partially because of culture and partially because of regulations. Even if there were, you would still move to the GTA to set up your startup for access to talent.

Western Ontario could and does produce jobs in mining, but people generally don't want to live near mines, so even if the mining industry expands there, the population is not going to increase significantly.

The specialties in Kelowna and the rest of the Okanagan are agriculture (fruit production), and services to old folks (dryness good for arthritis). It's a nice place, but it's just too close to Calgary and Vancouver, so it's very easy for young people to leave for greener pastures.

Canada should invest more into it's oil sands, but it is held back by environmental concerns, as well as a mini-culture war between Alberta and the rest of Canada, with the latter seeing the other as holding them back and taking their money, while the latter sees them as being basically American. The 2010s were basically a lost decade in terms of pipeline building, and the cancellation of Energy East means that Eastern Canada actually imports oil from the United States (therefore the prospect of selling more excess energy to the US isn't high).

New Brunswick actually has a lot of potential with their oil refineries. If Northern Maine was part of Canada, something like Energy East would be much simpler, and you could directly join an expanded St John port to Montreal with a railway. St John would become the undisputed center of Eastern Canada. But Maine is in the United States, and so Moncton is not going to go away because everyone needs to pass through it while driving to Montreal or Toronto. This awkward drive is why neither Halifax nor St. John can really compete versus Montreal as transportation hubs. Moreover, egalitarian suspicion of the Irving family is going to limit investment into New Brunswick from outside the province.

Also, while the temperature of the Maritimes isn't bad, if you look at the average snowfall, you can see that the actual problem humidity, since you'll spend at least a couple months per year with 6 foot deep snowdrifts (same problem in Manitoba and Western Ontario). Prince Edward Island actually has an immigration program like the one you describe, called the Provincial Nominee Program, but only about 30% of newcomers actually stay (with the rest moving to larger cities in Halifax or the west).

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Tomas Pueyo's avatar

Very good comment, thanks!

I do think many things can be done though:

Carney is trying some of them as we speak.

The Canadian Trade Agreement was signed 8 years ago.

Waterworks continue being built.

Plenty of startups are remote.

Oil developments are very much easy to carry out. Many environmental groups are watermelons, and those should be easier to neutralize. Or, they are one cultural shift away from being undermined.

YIMBYs are winning in the US, they can in Canada too.

Immigration requirements could be stronger.

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Ray Bamford's avatar

Another insightful article in an excellent series. Well done Tomas.

Something I thought you might emphasize more: Canada could cultivate university education, scientific research, and immigration ... leading to more successful entrepreneurship ... creating a virtuous circle of successful companies, more financial resources, and more attractive universities, which attract more global talent, and create more successful companies.

In the US, the gutting of scientific research, combined with the threats on international students, faculty, and professionals, create an opportunity that Canada could conceivably exploit.

Another topic, which I dread mentioning, is nuclear weapons. The non-proliferation status quo in NATO and East Asia has depended on the assumption of US support. Today, sadly, that assumption looks questionable or doubtful. A handful of nuclear bombs would create a powerful deterrent for countries that don't currently have them.

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Tomas Pueyo's avatar

Nuclear makes a lot of sense! Good point.

I don’t have many great angles on education and research yet, beyond agglomeration effects and investment. Will think about that!

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Markdk21's avatar

Thanks for pointing out the most obvious way to deter American aggression. Alas, countries like Iran and North Korea have been well aware of this for years and Trump's decision to abandon Americas allies means that many more countries will be thinking the same way now.

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fswan's avatar

There are numerous areas in which Mr. Pueyo excels; I have learned so very much from him. The geography and demographic facts and conclusions he lays out here are invaluable - grateful for the imparted knowledge. However, despite my deep disdain for Trump's manner, he (or any successor, since Mr. Pueyo invites this possibility) would need the backing of numerous instituions, including Congress, the military (absent a declaration of war, without which would make the action illegal), and the electorate itself, who would be sending their sons and daughters and making the economic sacrifices war entails. And not for nothing, while differences exist, we actually like our neighbors to the north quite a lot, value their friendship, and are proud to share the world's longest friendly border with them. (It would be like going to war against your brother - something I think we gave up in the 1860s - at least I hope!) But my number-one note here is the deep irony that Mr. Pueyo's suggestion that Canada drop all its trade barriers is what got us to the current situation. Hello! I do wish Trump would stick a sock in his mouth sometimes - ok, usually! - but can't we drop all tariffs to zero and call it a day?

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Tomas Pueyo's avatar

Russians consider Ukrainians their brothers.

A country can not bet its future on the hope that their neighbor remains reasonable.

Tariffs are dumb. International or interregional.

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Jacob Horbulyk's avatar

One other thing holding Canada back is lack of medical professionals: Canada imports people but isn't willing to recognize foreign medical credentials and Canada doesn't produce enough medical professionals domestically to cover the need.

NB might hypothetically offer a higher standard of living but the medical professional shortage there is so severe that anyone with a medical condition living there will experience a low quality of life.

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Tomas Pueyo's avatar

Or because there's a shortage, they would make a lot of money?

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Marc Snyder's avatar

No, not really. As I think you know, health care is free for patients in Canada. The cost of health care is covered by the provincial budget. Doctors are paid per medical acts. The fees paid by the government are set in advance and aren't linked to offer and demand. In fact, the fees paid by the government to doctors are decreed by the government itself. In Ontario, for example, the Ontario Health Insurance Plan (OHIP) uses it own OHIP Schedule of Benefits and fees (https://www.ontario.ca/page/ohip-schedule-benefits-and-fees).

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Bradley Hoersten's avatar

Why not just build a military base in the unpopulated areas?

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Tomas Pueyo's avatar

That's an option. But there must be more to it or else it won't become a city. Maybe a river to a base at the mouth of the Mackenzie, and make it a trading hub for oil, gas, and mining?

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Chetan Kumar's avatar

Thank you, this was a very indepth article in which I learned a lot about Canada.

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Aaron's avatar

I strongly disagree with the rationale for expanding Canada's oil and gas industry for many reasons.

(1) The assumption that doing so would displace exports from less ethical countries is questionable.

(2) Demand is influenced by supply. Increasing the abundance, and lowering the price, of fossil fuels is only likely to prolong the world's dependence on them.

(3) That's especially true when you consider the opportunity cost of time and money diverted to building fossil fuel infrastructure that could have spent on accelerating the transition to clean energy.

(4) The economic benefits are also dubious. Canada's oil and gas industry receives large subsidies (and the subsidies for carbon capture are truly massive), and its costs to the environment and public health have been externalized. There's also the question of how well Canada can compete effectively with the US, Qatar, Saudi Arabia, etc. based on price, and the risk of falling demand and stranded assets in the not too distant future.

Here's a recent article about the risks to Canada's LNG industry: https://www.theenergymix.com/banking-on-lng-exports-is-a-high-risk-gamble-for-canadas-future-growth/

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Tomas Pueyo's avatar

Thanks for your dissent!

(1) Why? You just state your disagreement rather than arguing it.

(2) and (3) The cost reductions of solar and batteries are exponential. For example, solar is already much cheaper than oil and gas, and will get 8x cheaper in the coming decade

https://unchartedterritories.tomaspueyo.com/p/can-solar-costs-keep-shrinking

Therefore, you are right that this would slow down solar but very marginally: right now, the limit to more solar deployment is not economic feasibility, but regulations and paperwork, as well as connections to the grid. The limiting factor is not lack of funding nor lack of economic opportunity.

(4) The subsidies, if they exist (?), pale in comparison with the revenue generated. If you truly believed that, you'd favor deregulating oil and gas.

Except for the CO2 cost, which was externalized, but is now internalized thanks to the CO2 consumption tax!

Canada can absolutely compete with the US (same geological basin), and with Saudi Arabia & co only when oil prices are high. Yet another reason to deregulate the market!

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Aaron's avatar

I think the burden of proof should fall on the assumption that the expansion of oil and gas production by developed countries *won't* increase emissions. That said, this backgrounder explains why LNG exports in particular are likely to increase emissions: https://cafesottawa.ca/addressing-climate-misinformation/#naturalgas. It includes references for a recent report by the US Department of Energy which found that increasing LNG exports would likely displace more renewables than coal, and would increase emissions (despite highly optimistic assumptions about carbon capture).

I found it challenging to find good information about: (1) the revenue Canada gets from the oil and gas industry, and (2) how much it pays in subsidies. Estimates vary wildly for (2), largely due to differing definitions of subsidy. There's a good (if slightly out of date) explainer at https://www.cbc.ca/news/science/fossil-fuel-subsidies-expaliner-1.6371411. For 2020, estimates ranged from $4.5 billion to $81 billion. The high end estimate treats external costs as implicit subsidies. Canada receives tens of billions of dollars each year in royalties, taxes, etc. from oil and gas, so the industry *is* fairly profitable overall if you don't count external costs.

Speaking of externalities, the current industrial carbon price covers only a fraction of the climate costs. There are other externalities too. Over 15,000 Canadians are estimated to die prematurely from air pollution each year. The liability for cleaning up the oilsands mining operations, for example, was estimated in 2018 at $130 billion.

A recent backgrounder [https://environmentaldefence.ca/wp-content/uploads/2025/04/Canadas-Fossil-Fuel-Funding-in-2024_EDC_April-2025-1.pdf] pegs the amount of federal public financing given to fossil fuel companies at almost $30 billion -- financing that could have been used to build out the country's interprovincial transmission infrastructure. That's an example of the opportunity cost of investing in oil and gas instead of the energy transition.

It's wonderful that solar energy and batteries are getting cheaper at an exponential rate. I don't think it follows that, because permitting and grid connections can be bottlenecks currently, there's no harm in investing in fossil fuels instead of doing everything possible to accelerate the deployment of clean energy (both domestically and in lower-income countries). Public financing could be redirected to expanding the grid, or investing in less mature technologies, such as offshore wind, long-duration battery storage, or enhanced geothermal systems (which benefit from the expertise of oil and gas workers).

I'm not sure what you mean by deregulating oil and gas. Are you referring to the elimination of subsidies and government supports? The Trans Mountain Pipeline Expansion, for example, would never have been built if the federal government hadn't bought it, and eventually spent $34 billion on finishing it.

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David Brown's avatar

I would vote for that for my state.

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John Wills's avatar

Great analysis - thanks Thomas.

Would love to hear your thoughts on three Canadian perspectives.

1) Cultural divides between: recent immigrants, long ago immigrants/offspring, and indigenous peoples; Quebec and the rest; and East and West (and why a high school friend would say "Let the eastern bastards freeze in the dark" when he moved from the west to my Ontario high school in the 1960's - and might still think that). And how Trump might help to bring us all together.

2) Opportunities for Canada to become an Energy superpower as the new PM promises. In particular, in exporting Nuclear technology such as CANDU and SMRs, and exporting LNG from all three coasts (as the Northwest passage opens up year round thanks (due) to climate change).

3) International AI. Toronto, Montreal and other locations have significant AI capabilities. A Trump loving Canadian investor wants to build "the largest AI data centre in the world" in Alberta, to leverage abundant local natural gas for energy. Where do you think Canada sits in the AI world, and is there an opportunity to build a global AI centre of excellence in fields such cybersecurity for western democracies, as the US steps away from international collaboration.

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Tomas Pueyo's avatar

Immigration deserves its own article. Quebec is special but I don’t think that situation has changed much.

The east - west divide is real though. I expect to explore it in the coming articles.

It’s a no-brainer that Canada can become a fossil fuel and uranium superpower. SMRs are unproven. I don’t know about CANDU specifically yet.

The AI game will be played between China and the U.S. Doesn’t mean Canada is out. It just means it’s not something Canada will be the 1st in the world at. It should definitely invest though: it’s the future.

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