Canada - Standard of living

Hello, and welcome to today’s deep dive. I want to talk about a critical issue unfolding in North America, one that hits at the heart of economics, politics, and culture—how Canada might be on the verge of a significant decline in its standard of living, triggered by external pressures from the U.S. and internal mismanagement that’s been decades in the making.

Let’s start with a striking example: the University of Pennsylvania, a prestigious American institution, recently backed down on transgender policies after threats to cut off U.S. funding. This story isn’t just about a university—it’s a metaphor for how vulnerable institutions—and indeed, countries—can be when faced with the sheer economic muscle of the U.S.

Now, imagine this scenario applied to Canada. Picture President Donald Trump imposing a 50% tariff on Canadian goods unless Canada stops supporting what he calls “transgender nonsense,” while simultaneously backing Alberta’s secession movement. It’s not just hypothetical; it’s a warning sign. Canada’s economy, with 75% of its $2.5 trillion GDP tied to U.S. exports, could face a 5 to 10 percent GDP loss just from tariffs alone. British Columbia, for example, estimates a $69 billion hit from a 25% tariff—now imagine doubling that tariff.

Add to that the looming risk of South Asian entrepreneurs, who contribute around 7% of Canada’s GDP mainly through retail and hospitality, migrating en masse to the U.S. for higher profits—potentially causing another 2 to 3 percent GDP hit. And Alberta, with its growing secessionist sentiment—recent polls show 36% support—could remove another 10% of GDP if it breaks away.

What does all this add up to? A likely 15 to 20 percent drop in Canada’s standard of living over five years.

But why has Canada put itself in such a precarious position? A lot of it boils down to politics and policy priorities, particularly those shaped by the Liberal Party over the last 50 years. The Liberals have consistently prioritized big business, diversity, equity, and inclusion policies, bilingualism, and Quebec-centric interests. This focus has alienated small business owners—80% of whom in Western Canada distrust the Liberals deeply. This distrust isn’t random; it’s rooted in decades of policy decisions.

Take Mark Carney, Canada’s former central banker and economic advisor. During his time at the Bank of Canada from 2008 to 2013, he stabilized big banks during the financial crisis with interest rate cuts and loans. But small businesses, including many South Asian retailers, struggled to access credit. His later roles at the Bank of England continued this pattern, prioritizing multinational corporations with massive quantitative easing packages, while small firms got just crumbs. And as a Liberal economic advisor from 2020 to 2024, Carney’s task forces pushed infrastructure and green energy investments, but only a small fraction of relief funds went to small businesses—driving many South Asian entrepreneurs south to the U.S.

The Liberals’ record is equally telling. Pierre Trudeau’s National Energy Program in the 1980s favored Eastern Canada’s big energy firms at the expense of Western small businesses. Jean Chrétien’s deficit elimination efforts benefited corporations, but Quebec marketing boards raised costs for retailers. Justin Trudeau’s recent term saw a $428 billion deficit used largely for corporate bailouts, and diversity mandates that many small South Asian businesses found stifling.

And let’s not forget the power of media and optics. Justin Trudeau’s rise in 2015 was aided by a $16 orange juice scandal blown out of proportion—proof that media-driven elections often overshadow real economic issues.

So, what can Canada do to avoid this looming crisis?

First, it must prioritize small businesses, especially South Asian and Western Canadian entrepreneurs. That means implementing retaliatory tariffs targeting key U.S. industries, establishing substantial small business funds—think billions in grants and tax credits—cutting red tape, reforming Quebec’s marketing boards, and diversifying trade beyond the U.S., particularly with India.

Social policies must be adjusted as well—reducing diversity mandates and focusing on biologically based sports criteria to preserve fairness, while maintaining gender protections without ideological overreach.

Addressing Alberta’s secession threat requires meaningful investments: pipeline approvals, autonomy, and direct engagement with South Asian communities to ensure retention.

Governance reforms are critical too. The focus should shift away from DEI mandates and bilingualism as primary priorities and toward tax cuts and small business councils. Transparency and communication through platforms like X (formerly Twitter) can rebuild trust.

Diplomatically, Canada should leverage its G7 partnerships and its successful border fentanyl reduction plan to negotiate tariff exemptions or reductions.

Now, realistically, the current Liberal government and Carney’s influence mean we might see only a partial response—smaller tariffs, limited funds for small businesses, and minor reforms that won’t stop the decline.

But there is hope. With 80% of small business owners in Western Canada expressing anti-Liberal sentiment, there is pressure for change. A small business-driven strategy could mitigate losses and reduce the potential standard-of-living decline from 20 percent to closer to 15 percent.

In conclusion, this isn’t just about trade or tariffs. It’s about who Canada chooses to support—big business or small business—and how it navigates cultural and political tensions. The choices made now will shape the country’s economic future and the livelihoods of millions.

Thanks for listening. If you want to dive deeper into these issues or discuss strategies for small business advocacy in Canada, stay tuned for more episodes.