The Peter Zeihan Podcast Series - No Immigrants & Negative Growth = Canada’s Economic Tipping Point || Peter Zeihan

Episode Date: January 9, 2026

Canada sharply restricted immigration and scored itself a 0.2% population decline. This flips the script on a long-running strategy of lax immigration to offset low birth rates and prevent pension/workforce collapse.Join the Patreon here: https://www.patreon.com/PeterZeihanFull Newsletter: https://bit.ly/4snNLyI

Hey all, Peter Zine here, coming to you from, not Canada, but Colorado, but we're going to talk about Canada anyway, because, you know, it's snowing. Okay, so the big news in Canada is that they have had a population drop this year, 0.2%. Their first drop in, oh, geez, quite some time, a few decades at least. What does this mean for them? Why did it happen? Where is it going to take them? So if you dial back to 15 to 20 years ago, Canada was in a population bomb situation that is very, very, similar to what's going on in Germany and Italy. They basically, the birth rate had dropped for decades, and they hadn't had a raising birth rate since really almost World War II. And it was really starting to cause some problems for them. They knew that in the next 10 years, which would bring us to,

you know, five years ago, that they would be facing pension collapses, more people in their 70s and 60s and 50s and 40s and 30s and so on. And there was really no hope, very little hope anyway, that they would ever have a domestic regeneration of their population structure because there just weren't enough people under 30 to have kids in the first place. So under the previous, previous, previous prime minister, Stephen Harper, who was a conservative from the province of Alberta, which is basically the Texas of Canada, started opening the doors to immigration.

Now, Canada had always had a relatively egalitarian view towards immigration compared to everybody else in the world. But it was always an issue of a race. The problem is, is when the migrants come to the United States back in the pioneer days, they could go out and become small-hold farmers and be exporting grain to the wider world in a matter of months. And the wealth came really easy. In Canada, not so much. The prairie provinces did have that option, but they were drier and they were colder and they were less reliable.

And if you start going into interior, say, Quebec and Ontario, you're on a chunk of geography called the Canadian Shield, which is a bunch of uplift that had been scraped, cleared by the glaciers, and so there just wasn't much soil to work with, and the soil was very poor, and of course it gets a little cold for most of the year. So they never had the pioneer experience that the United States had, and that took Canada in a different direction, and means that most of the population isn't just massed on the southern border for warmth, but clustered into cities for warmth,

about 85% of the population of Canada lives in the major cities. It's a very different dynamic, economically and socially than what we have in the United States. socially, it makes it really easy to bring in other groups because it's already a polyglot. Economically, it means that unless you keep that cycle of people coming in, you start to age out really quickly. And that's what happened back in the 1990s. So Harper opens the doors, immigration doubles, triples, quadruples. And they bring in enough people who are in the age block of roughly 30 to 45 that they can pay into the system enough in taxes. before they retire that it doesn't break the bank.

The downside of that plan is that once you start that policy, you can never stop. Because if you bring in someone who's 40, 10 years later, they're 50, 10 years later, they're 60, and all of a sudden they're retiring. So whereas the United States, people can walk here from the South, and so we tend to get migrants that are under 25. In Canada, they typically have to fly there, and so they tend to get migrants that are over 40. So once you open the door, you have to leave it open, and you bring in hundreds of thousands of people every single year. You do that for 20 years and you start to change the political and the

ethnic makeup of the country. Now, in large parts of Canada, that's not a problem. I mean, if you're in Toronto, it's a polygod. If you're in Montreal, as long as the people are coming in are French, it's fine. And, you know, a lot of French ethnics from France came to Montreal in the aftermath of the European financial crisis and never left. But they were a close enough ethnic mix that it wasn't too much of integration. I mean, people from Montreal eventually discovered that the French can be kind of pricks, but you know, that's a French, inter-French problem. For the rest of Canada, it was a much more diverse crowd, a lot of South Asians, but really people from everywhere. And eventually it reached the point that Canadians who had been born in Canada, regardless

of their ethnic affiliation, were starting to lose connection with the place that they were considered themselves to be from. So there's a cultural issue, but the bigger one was much more economic. Everybody has to have a place to live. And so when you bring in a half a million or more people a year into a country that only has about 30 million people, you start changing the dynamics of the housing market very, very, very, very quickly. And many cities in Canada, most notably Vancouver and Toronto and Montreal, but also the secondary cities like Regina and Saskatoon suddenly became unaffordable for people who would live there all their lives. And I'm not talking like the bottom 10% on the socionomics. I'm talking like 80%. I'm talking like 80%. I'm talking like

80% of the population. It hit a breakpoint two years ago in calendar year 2023. Back then, Justin Trudeau was still premier, and he realized that it was shifting the entire country, not necessarily on the left-right spectrum economically, but on the left-right spectrum socially. And the far right, if we were in the United States, we would call them MAGA, started to rise up and agitate and became very politically potent. And so he realized that unless his great centrist, liberal experience was going to be threatened that he needed to dial it back. And in the course of about 12 months, the Trudeau government basically shut almost all possibilities for illegal migration to Canada. And since the borders between Canada and the rest of the world aren't really the walkable

type, that pretty much was it. And so this last calendar year, calendar of year, calendar of 2025, we actually had a population decline. Now, under normal circumstances, that wouldn't have been enough. And under normal circumstances, Justin Trudeau's liberals would have lost horribly in the general election that they had last year. But entered Donald Trump, who started adjudicating against all things Canadian, started calling Canadians nasty. And we got this big nationalist upwelling for whatever candidate it looked like Trump was not supporting. And so the liberals were able to eke by with a new government once Trudeau reside. Where does that leave us now? Well, Canada has now closed the door.

And with that door closed, the demographic. time bomb starts ticking again. And if they leave it close for any more than five years, we're going to be looking at a hollowing out of the entire economic fabric of what's left of the country. What I wrote 15 years ago, and this was just starting up, was that without a massive change in demographic structures, we were within just 10 years of the country going to a position where Alberta was basically paying for everything, because that's where the oil is. We're back in that situation again. The difference this time is that globalization has failed and is now basically going through the process of dying. And Canada, luckily, was never really globalized. They've basically

traded with the United States and very few other places. Over 80% of their trade, if I remember correctly, it comes south. That hasn't changed. What has changed is that today there is an impulse in North America for a massive re-industrialization program to build up the manufacturing plant that we need here to replace what we used to depend on from the eastern hemisphere. There is definitely a role for Canada to play in that. Now, they have aging infrastructure. They have an aging workforce. They're heavily regulated. They're nowhere near going to benefit as much as Mexico has and will. But via the existing connections between Auto Alley and Detroit and the province of Ontario, they're far more integrated into American automotive manufacturing,

the really other part of the world, except for the possibility of Mexico versus Texas. So there's plenty to work from. There's plenty to work with. And since we're only talking about a country here of 35 million people, of whom like a third are already retired, you don't have to have a lot of breakthroughs for Canada to really benefit on the aggregate.

But it does require a very different approach to policymaking, not just in Ottawa, but also in Washington. And we're probably not going to get that in the next three years. Now, NAFTA negotiations, renegotiations happen in calendar year 2026. How those talks go will determine what is possible for Canada for the next 15 to 20 years. And if they're not going to allow large-scale immigration, that is really the only game in town. So it's going to be very interesting to see how the Canadians come to terms with higher nationalism versus the Trump administration. versus the need to just suck it down and put up with the Trump administration

in order to get what they need on trade, because they can only do one of the two. Whoops, I said that backwards. They have to do one of the two.