TORONTO — Billions of dollars are leaving Canada as investors continue to send money and jobs south to the United States. Many point to the Liberal government’s tough approach to business as the main reason. P
Prime Minister Mark Carney, who took over after the Liberals won the May 2025 election, has promised to attract more foreign investment and help the economy recover.
Still, those promises remain unmet. Instead, higher taxes, strict regulations, and heavy government control have made Canada less appealing to investors. With the lowest growth rate in the G20, concerns about Canada’s economic future are only growing.
Since Mark Carney’s win, an estimated $84 billion has exited Canada, most of it moving to the United States, based on shared figures from X. This adds to over $500 billion that has left the country since 2015, most of it blamed on business policies first introduced by Justin Trudeau and now continued by Carney. Large companies like Enbridge have announced plans to shift operations and spending to the U.S., quoting the unfriendly business climate in Canada as a major reason.
The Fraser Institute says that total business investment (excluding homes and adjusted for inflation) dropped 7.3% from 2014 to 2022. The resource sector, including oil, gas, mining, and quarrying, saw investment plunge by 51.2%.
So far in 2025, this drop has only picked up speed, pushed by investors searching for steadier returns and less red tape across the border. While Canada struggles, U.S. business investment has jumped by more than 30% per person, showing a clear split between the two countries’ economies.
Tight Rules and Worries Over Property Rights
Canada’s current policies are driving investors away, especially with how the Liberals handle the energy sector. Industry watchers call the government’s rules “investment-repelling.” Two laws passed under Trudeau in 2019—often called the “no new pipelines” and “no tankers” bills—have made it much harder for Canada to build new energy projects or ship resources overseas.
Recent rules that cap greenhouse gas emissions and force cuts in methane output have also raised costs. As a result, many companies are choosing to invest in countries with fewer barriers.
Concerns about private property are also rising. In 2022, the Supreme Court of Canada ruled that tough regulations could count as “constructive taking.” This means if business owners cannot use their property in any meaningful way, it may be as if the government has taken it, even if they still own it on paper.
This decision rattled investors, especially in places like Alberta, where resources play a huge role in the economy. Higher scrutiny under the Investment Canada Act, especially for deals involving state-owned buyers and critical minerals, has also pushed away needed foreign money, especially from China.
Taxes keep piling on. A growing carbon tax, higher payroll costs, and rising income tax rates make things even harder for businesses. Statistics Canada reports that from 2006 to 2021, red tape grew by 2.1% each year. This has chipped away at business GDP by 1.7%, job growth by 1.3%, and overall investment by 9%. These problems aren’t new, but critics say Carney’s government has not fixed much so far.
In the 2025 election, Mark Carney promised he would make Canada more competitive and bring in foreign money. His platform included $130 billion in new plans, tax relief, and infrastructure spending to boost private business growth.
He said these policies were needed to protect Canada’s economic independence, especially as the U.S. takes steps to protect its industries. But after three months, little evidence shows real progress.
Opponents say Carney’s plan, with $22 billion in income tax breaks and $12.5 billion to undo capital gains tax changes, looks more like a political move than real reform. The promised $28 billion in savings from cutting wasteful spending lacks a clear strategy.
No plans have been made public to cut down on red tape or fix the Investment Canada Act review process. At the same time, the federal deficit is climbing from an expected $46.8 billion this year to $62.3 billion next year, raising worries about how long Canada can keep spending like this without real economic gains.
Canada’s Economic Troubles Deepen
Canada’s economy is stuck. Over the past nine years, real per-person GDP growth has been just 1.7%, with the U.S. posting 18.6%. In 2024, only Ontario saw real gains, thanks to oil and gas output in Alberta. Looking at the bigger picture, Canada is last among G20 countries for economic growth.
Private sector forecasts say the country could shrink by as much as 6.2% this year, a trend that appears to have carried into 2025. Canada’s debt-to-GDP ratio has reached 42.1%, up 11 points compared to before COVID, putting more limits on how much Ottawa can spend to try to turn things around.
The critical minerals industry shows how deep these issues go. While Ottawa’s Critical Minerals Strategy is supposed to turn Canada into a global leader, tough new rules on foreign investment from state-owned firms have made it even harder for Canadian companies to get the funding they need. Legal experts at Cassels Brock & Blackwell LLP say these limits, along with permitting waits that often last over a decade, have undercut investor trust and stalled project growth.
Carney’s government faces calls to make big changes. Alberta Premier Danielle Smith, a frequent critic of Ottawa’s policies, has even suggested a provincial referendum on separation in 2026, saying the federal “anti-energy” approach hurts Alberta. While such a vote remains unlikely, it shows just how frustrated resource-rich provinces have become.
To keep capital from leaving, analysts recommend a strong effort to cut red tape, possibly through a “regulatory cap-and-trade” system that removes old rules before adding new ones.
Repealing or reworking the pipeline and tanker laws, speeding up permits, and lowering taxes could send a clear message that Canada wants to grow again. Without quick changes, Canada risks falling further behind the U.S., where a more open business climate continues to attract investment and jobs.
Carney’s reputation now rests on his ability to fix this crisis. With capital still flowing south, Canadians are left hoping for better days ahead as the country faces a real threat to its long-term prosperity.
Sources: Fraser Institute, Statistics Canada
