When it comes to immigration policy, most of the focus on the Donald Trump administration’s impact on Canada has been on his commitment to crack down on illegal immigration and the potential that it could lead to an influx of asylum claimants at Canadian borders.
There has been far less attention paid to how his changes to America’s legal immigration regime may reduce demand for Canada among the world’s most dynamic and talented immigrants. But if Trump follows the instincts of Elon Musk and others arguing for a major emphasis on skilled workers, Canada could find itself at a competitive disadvantage.
Going away from the gold standard
A big part of that disadvantage is a consequence of the Trudeau government’s failed record on immigration. Canada’s merit-based approach, the points system favouring younger migrants with language proficiency and in-demand skills, has been increasingly sidelined in recent years.
For instance, the government’s policies have blurred the lines between temporary and permanent streams, effectively allowing for a parallel shadow immigration system through the misuse of programs intended for temporary migration. Until its recent mea culpa, the Trudeau government policy has largely been a decade of few restrictions on temporary migrants.
One underappreciated consequence is that the government’s own recent revised immigration levels plan sees nearly half of anticipated permanent immigrants drawn from temporary migrants who are already in Canada. It’s a problematic approach both economically (temporary residents now are often lower skilled and lower waged) and in terms of basic fairness towards those who played by the rules and whose permanent immigration applications are buried in a growing backlog.
It was not long ago that Canada’s immigration system was held as a gold standard. Praise for it came from across the global political spectrum. Around the same time period, Germany’s left-wing Social Democrats (SPD) in 2015 and right-wing Alliance for Germany (AfD) in 2017 both separately called for making Germany’s economic immigration system specifically more like Canada’s.
During his first address to Congress in 2017, Trump himself specifically praised Canada and Australia’s merit-based economic immigration systems. Though attention on White House immigration policy often focused on border measures, the president repeatedly praised Canada’s (former) approach to economic immigration throughout his first term. He supported legislation put forward by senators Tom Cotton and David Perdue that included shifting the U.S. to a merit-based immigration system, with repeated unsuccessful attempts made between 2017 and 2019.
Merit-based reform has also eluded previous administrations, including previous Republican President George W. Bush in the 2000s and going back to Democrat Lyndon Johnson’s unsuccessful attempt in the 1960s.
When Trump was praising Canada’s immigration system during his first term, the composition of America’s system was effectively the inverse of Canada’s. At the time, approximately 63 percent of individuals granted legal permanent residency in Canada were done based on economic qualifications, while just 24 percent were admitted through family connections. At the same time, 63 percent of U.S. green cards (permanent residency) were issued to family-related immigrants, whereas roughly 12 percent were awarded for economic reasons.
With a broad mandate and Republican majorities in both houses at least until the 2026 mid-terms, the new U.S. administration is in a better position to make the changes that eluded the first Trump administration. While the election campaign and early days of the new administration have so far focused on addressing illegal immigration and border challenges, the Trump 2024 platform still committed to “prioritize Merit-based immigration, ensuring those admitted to our Country contribute positively to our Society and Economy.”
What this means for Canada
Even in better times, Canada always faced a “brain drain” challenge with our southern neighbour. For both homegrown talent and prospective international talent, the U.S. has always been the dominant draw. The U.S. state with the highest combined personal income tax rate, oft-ridiculed high-tax California, is comparable to Canada’s lowest tax jurisdiction, Alberta, according to a recent Fraser Institute analysis. The U.S. is also the global draw for entrepreneurial risk-takers. It outperforms the entire European Union by 70-to-one when it comes to high-performance start-ups with market caps over $10 billion.
Recent circumstances likely have not made Canada more of a draw for skilled workers. In addition to being a higher tax jurisdiction, we’re arguably a recessionary economy in addition to well-known affordability and housing supply challenges.
Frantically undoing the negligence of the last decade is only a minimal first step to restoring Canada’s competitiveness in economic immigration. While Canada fiddled, other nations like Australia made positive changes to their systems. Last month, Australia implemented new reforms that include focused new visa streams for in-demand skills.
In a paper last year, the C.D. Howe Institute proposed several policy changes that could help restore the economic edge to Canada’s immigration programs. Our next government would do well to take these under consideration: setting a minimum points eligibility threshold; considering a pre-admission earnings factor; and boosting language standards.
It’s clear that Canada’s immigration has lost its economic edge. That’s bad news at the best of times but puts us at a further disadvantage when the U.S. is finding theirs.
Already on the American agenda is a change to the embattled H1-B skilled worker program. It’s recently proven fractious within the president’s own supporter coalition, pitting tech entrepreneurs wanting to reform the program to better align with industry, against those more generally opposed to its use. Both sides generally agree that the status quo is untenable and due for change so it isn’t displacing domestic workers (parts of that discourse bear a curious parallel to Canada’s past foreign worker debates).
Just over a decade ago, Canada felt competitive enough to go on the offence in the fight for skilled workers. The Government of Canada set up provocative billboards in the heart of the U.S. tech industry, pitching Canada’s Startup Visa program to skilled workers in Silicon Valley frustrated by the complexities of the H1-B visa program.
Those days are now long past, but we shouldn’t throw the white flag yet. It’s critical that our next government work to restore Canada’s competitiveness in economic immigration.
