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Tariffs

If Canada is 'Ripping Off' the U.S., Why Is It Falling Behind?

Americans have been widening the prosperity gap with our neighbors for years.

J.D. Tuccille | 9.7.2026 7:00 AM

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President Donald Trump rips a paper in half, with the U.S. flag on one side and the Canadian flag on the other. | Illustration: Midjourney
(Illustration: Midjourney)

President Donald Trump's latest temper tantrum over Canada, including the renaming of Lake Ontario as Lake America after the collapse of trade negotiations, is premised on the claim that "Canada has been ripping off the United States for decades." At least, that's what the White House insisted in an August 25 press release about the tariff dispute. But, if that's true, why are Canadians poorer than Americans and falling further behind?

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Americans Grow Wealthier More Quickly Than Canadians

A new study from Canada's Fraser Institute points out that while our northern neighbors started the century with high hopes for their economic prospects, the years since have shown them lagging Americans. If Canadians are taking advantage of us, they're doing a remarkably poor job of it.

"In 1999, inflation-adjusted gross domestic product (GDP) per person in the US was CA$10,766 higher than in Canada. By 2024, that gap had more than doubled to CA$23,757," write study authors Grady Munro, Jake Fuss, and Joel Emes. "Similarly, in 2010, inflation-adjusted median employment income in the US was CA$6,126 higher than in Canada. By 2024, that gap had increased to CA$8,663."

The Fraser study notes that since 1999, government-sector employment has been growing faster than private-sector employment in Canada. The opposite has been true in the United States. And while Canadian workers have increased their productivity by 26.7 percent since 1999, they've still lost ground as Americans increased productivity by 67.9 percent.

Canada's relatively slow growth in prosperity as compared to the United States is, no doubt, frustrating for our northern neighbors. As international communications strategist James Stranko noted last week in a Wall Street Journal column, Canada has defined itself since its founding as the "un-America" and "almost all of Canada's major moments of national unity were born out of rejection of, or protection from, American power."


The Canadian Century That Wasn't

The Fraser authors underline this point, quoting Sir Wilfrid Laurier, Canada's seventh prime minister, who said in 1904, "the nineteenth century has been the century of the United States development….The twentieth century shall be the century of Canada and Canadian development." When the 20th century turned out fine, but not brilliantly so, for the northern country, hopes for a Canadian breakthrough were transferred to the 21st century. Again, Canada has done all right, but not especially well by comparison to the southern giant that Canadians measure their own achievements against.

"Policymakers have thus far squandered the Canadian Century," adds the Fraser study. "In particular, Canada began to truly squander this opportunity post-2014. Prior to 2014, Canada largely kept pace with, or in some cases exceeded the US, across multiple measures."

World Bank figures demonstrate the problem. In 2000, per capita GDP was $36,330 in the U.S. and $24,271 in Canada in current American dollars. The gap largely disappeared a decade later—only to widen again within a few years. GDP per capita was $90,026 in the U.S. last year and $55,697 in Canada. The Fraser study draws its data from different sources, but they show a similar lag in Canada's relative economic performance.

"From 1999 to 2024, GDP per person in Canada grew by 23.8%, while the United States experienced a 41.5% increase over the period. Put differently, GDP per person in the United States has grown 1.7 times faster than in Canada since 1999," write Munro, Fuss, and Emes. Or, to put it another way, Canadian per capita GDP was 81.7 percent of the figure for the U.S. in 1999 and 71.5 percent of American per capita GDP in 2024.

Looking at another measure, as of 2010, the Fraser study observes, "median income in Canada was $32,580 compared to $38,706 in the United States, leaving an income gap of $6,126 between the two countries" in a comparison using Canadian dollars. While that gap narrowed over the next few years, "by 2024, median employment income had risen to $37,361 in Canada and $46,024 in the United States, leaving an income gap of $8,663." That is, median employment income in Canada was 84.2 percent of the U.S. figure in 2010 and 81.2 percent of that figure in 2024.

Canada has been growing more prosperous over the years, but it's losing ground when compared to the increasing wealth of the United States.


Hobbled by a Growing Government

A significant part of the problem is that government employment has been growing faster north of the border than private sector employment. In 1999, private sector jobs represented 85.8 percent of employment in the U.S. and 81.2 percent in Canada. As of 2024, private-sector employment had slightly risen to 86.5 percent of all jobs in the U.S. but fallen to 78.5 percent of Canadian jobs. That means the private sector must shoulder a growing burden to fund the expanding government: "New government-sector jobs impose a corresponding cost through the tax system, which limits the extent to which government-sector employment growth contributes to overall economic growth." Also, labor productivity has declined for Canadian government workers while increasing in the private sector.

To an even greater extent than in America, Canada's private sector is hobbled by an unproductive and expensive government.

"Despite some early hopes prior to 2014, Canada has made virtually no economic progress relative to its southern neighbour and has instead fallen further behind where it stood at the turn of the century," the Fraser authors conclude.

It's difficult to see where Canada has been "ripping off the United States," no matter what the Trump administration claims. Instead, Canada has hampered its own economic prospects with a growing government sector that drains wealth from the productive private sector. Yes, Canada has some foolish protectionist trade policies—including barriers between provinces—but so does the United States, especially under the Trump administration. Both are now doubling down on self-harming tariffs.

The real question in the years to come is who will be more damaged by the escalating trade war between the U.S. and Canada. The country that does better at building prosperity will likely be the beneficiary of comparatively worse economic policies inflicted on the neighboring country's population by its own government. May the less self-destructive competitor win.

The Rattler is a weekly newsletter from J.D. Tuccille. If you care about government overreach and tangible threats to everyday liberty, this is for you.

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NEXT: RFK Jr.'s MAHA Cooking Show Is Government Propaganda. I Kind of Love It?

J.D. Tuccille is a contributing editor at Reason.

TariffsCanadaUnited StatesTrump AdministrationDonald TrumpFree TradeInternational EconomicsEconomics
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  1. mad.casual   2 months ago

    The headline reads like a sarcasmic-style non-contradiction framed as a contradiction out of completely aloof obliviousness.

    If Socialists have been ripping us off for years, why are Democratic Socialists so popular? If Canada has been ripping us off for years, why is it falling behind? If we keep giving handouts to the homeless, why do they keep falling behind?

    1. Sylvie1   2 months ago

      Indeed. Europe also lags behind the U.S., and there have been speculations in the media that Europe's been fining U.S. tech companies, perhaps even passing laws enabling it to do so, in part to prop up their own limping tech sectors. (As well, of course, as fighting the scourge of uncensored - which is to say free - speech.)

      That theory could certainly be applied to Canada, as well as to China and other countries with minimal alterations for markets and circumstances.

      1. mad.casual   2 months ago

        A rising tide lifts all boats, including Somali Pirate skiffs.

  2. SQRLSY   2 months ago

    I hate to insult the intelligence of any readers, butt slut me point out the oblivious: Canadians ARE getting benefits from the higher spending on Government Almighty (the pubic sector) cumpared to the sectors of spending on our private parts!!!

    To wit, to twit and to tit: They have suppressed (under the firm cummands of Canadian Government Almighty) global warmerering SOOO significuntly that their land mass up there is generally MUCH colder than that of the USA! So there, all of ye nasty nay-sayers!!!

    1. Eeyore   2 months ago

      Why does Canada hate tropical beaches?

      1. SQRLSY   2 months ago

        Actually-more-factually, shit is the tropical BITCHES, and snot the tropical beaches, that the Canadians hate... And WHY do they hate the tropical BITCHES? 'Cause THEY are the ones that create globabble warmerering!!!

  3. Fu Manchu   2 months ago

    The reality is, the grifting cult leader is nutso and completely detached from reality. He has no clue about economics, health, or anything else and his followers don't either.

    1. Don't look at me! ( Is the war over yet?)   2 months ago

      Ok, why so rough on Mark Carney?

      1. Fu Manchu   2 months ago

        You guys are such dumbasses it's hilarious.

        1. Don't look at me! ( Is the war over yet?)   2 months ago

          Poor, pour sarc.

        2. python33   2 months ago

          Canadian dumbasses? Totally agree, they should be thanking Trump.

  4. swillfredo pareto   2 months ago

    "Canada has been ripping off the United States for decades."...But, if that's true, why are Canadians poorer than Americans and falling further behind?

    I've been getting ripped off by the parasitic class in the United States for decades. That doesn't make them wealthier than me, it makes me poorer than I should be. Canadians have been letting American companies pick up the freight on energy and technology research, to name just two. The fact that they can't leverage this welfare just speaks to how pathetic America's hat has become.

  5. Thoritsu   2 months ago

    Why? Canada is far too socialist for it's GDP. Canada has little of value (oil, potash, lumber). Canada gets the complete benefit of location from its enemies and proximity to the US.

    Canada would be Peru if it wasn't touching the US. It is shocking that Mexico can't be more, but culture (not race) is completely holding it back.

    1. Brian DuBridge   2 months ago

      Completely on point. They have to watch their mouths or be prosecuted, their defenses against the government are being deprived while the government is ramping up aggression, and their social identity as passivists is detrimental to their overall well-being. The people had better wake up and subvert their government or they'll end up another Mexico.

  6. JFree   2 months ago

    As usual, Reason doesn't understand economics.

    Canada is losing out because it is inherently a resource economy (similar to Australia) that has chosen to solely be dependent on exports to the US while the US has gutted its own manufacturing (which requires resource as inputs). For a lot of stupid reasons, and one good reason, Canada chose to not do anything to boost its exports. In favor of financializing its economy. So now 5 of its biggest companies are banks - one is tech - and four are resource (two energy dependent on US, two mining with operations mostly outside Canada).

    Canada is irrelevant in global trade outside the US - and they will never be a reserve currency. So unlike London or NY, Canada just ain't gonna be a global financial center.

    Economically - they hung a kick me sign on their back and now Trump is kicking them

  7. Agammamon   2 months ago

    Because they suck at it. The Chinese are good at it.

  8. Truthteller1   2 months ago

    The headline is a baffling non sequitur

    1. Social Justice is neither   2 months ago

      The girl beating on you, tiring herself out and not doing much damage so why fight back? Seems to be the gist of it.

  9. Z Crazy   2 months ago

    Look at WHO in Canada's benefiting.

    A fucking marxist could have answered this.

  10. Brian DuBridge   2 months ago

    Trump is, and always has been, a total blowhard with a significant amount of his blowing being nonsense. The nonsense is increasing significantly. Renaming bodies of water and government buildings, especially after himself, is egomaniacal abuse of his position reminiscent of a dictator, and I don't believe he has much economical (or other) intelligence. His promises to reduce our own government haven't panned out over two administrations, and the ill will he generates will likely end with a boomerang effect that will label both terms as failures.

    1. Don't look at me! ( Is the war over yet?)   2 months ago

      Government employment is down 11%.

    2. Agammamon   2 months ago

      Renaming bodies of water and governmental buildings is reminiscent of a dictator? Is that what you are saying?

      So Canada is in the grip of a dictatorship?

      While Donald Trump recently ordered the renaming of Lake Ontario to Lake America, Canada has simultaneously engaged in extensive domestic renaming of its own historical landmarks, streets, and institutions over the past decade.

      Canadian Domestic Renaming Efforts

      Historical Figures: Canada has stripped names of historical figures like Sir John A. Macdonald from schools, roads, and statues across provinces including Nova Scotia, Ontario, and Quebec.
      Street Renames: Notable changes include renaming miyo-wâhkôhtowin in Saskatoon and Kichi Zībī Mīkan in Ottawa.
      Public Spaces: Yonge-Dundas Square in Toronto was renamed Sankofa Square, a move critics argued removed historical context regarding British Empire figures.
      Response to U.S. Renaming

      Local Actions: Ottawa City Council voted to rename Trump Avenue, with suggestions including Taco Avenue, while a petition sought to rename Trump Lake in Sudbury to Lake Canada.
      Public and Media Reaction

      Criticism: Some Canadian media outlets, such as the Toronto Sun, criticized the national outrage as hypocritical, noting that Canadians had been "renaming our own history" for years without similar public fury.

    3. python33   2 months ago

      Yet he keeps you idiots busy blowharding about him and showing how clueless you really are.

  11. Benitacanova   2 months ago

    "If Canada is 'Ripping Off' the U.S., Why Is It Falling Behind?"

    Because it sucks at both ripping and rising.

  12. James K. Polk   2 months ago

    Your comparison of Canadian and American prosperity was interesting, but your title question is incredibly idiotic. Maybe they would be falling behind even more if they weren't ripping us off. Maybe it wouldn't matter. Maybe they aren't ripping us off at all. Those should be the questions you're addressing. Then your title could reflect the answer you found.

  13. Moonrocks   2 months ago

    If Canada is 'Ripping Off' the U.S., Why Is It Falling Behind?

    Checkmate, atheists!

  14. TJJ2000   2 months ago

    "If Canada is 'Ripping Off' the U.S., Why Is It Falling Behind?" ...
    - Not sure why everyone is trying to answer the title question.

    "To an even greater extent than in America, Canada's private sector is hobbled by an unproductive and expensive government."
    - The author already answered it.

    Not only for Canada but also the US and specifically why Trump is raising Tariffs.
    You want to hate Trumps Tariffs?
    ...Unless you can push for spending cuts that drives Tariffs/Tax to be mandatory
    ...you're just a clown honking your rubber nose at everyone.

  15. MWAocdoc   2 months ago

    "if that's true, why are Canadians poorer than Americans and falling further behind?"

    Catastrophic logic failure here. Poor people rip off rich people all the time. While I agree that Canada is not ripping off America, false connections do not bolster your case! It is impossible for free trade partners to rip each other off unless they violate the mutual agreement between the parties. If you sell something to me at a price that I am willing to pay, it's not a rip-off. If the government tries to discourage mutually agreeable trade transactions by jacking the price up with tariffs, now THAT is a rip-off.

    1. JohannesDinkle   2 months ago

      Trump is a master at making provocative moves. Let him propose absolute free trade - no tariffs from either country - to Canada. Carney will find a reason to refuse. Ontario and Quebec depend on support of Canadian businesses from American competition.

  16. Rick James   2 months ago

    Errboores up!

  17. Uomo Del Ghiaccio   2 months ago

    Canada has been taking advantage of the United States to defend their country for decades. The same is true with Europe. The United States simply can't afford to be the majority of the defense of Canada and Europe any longer.

    Trump has a point, even though he carries it too far and takes several actions that are counter productive.

    The United States needs to retract our military over time. We should not have standing armies located around the globe. Our partners, need to step up to the plate and defend themselves.

    Canada is at a disadvantage relative to the United States as it is as a whole, geographically located in a colder region with a shorter growing season, more extreme weather. There is the extra expense of green houses to grow produce, more time in the year when the ground is frozen, more management to remove snow, more wear and tear of the roads due to extreme weather.

    This being said, this comes with the territory, such as it does in Minnesota or North Dakota and other northern states in the USA.

    It is a fact that Canada imposes grossly excessive tariffs on goods that exceed the quota limit. Some people would call these quota extremely low and others would not, but regardless, it is protectionism.

    Many journalists with Reason, like to pretend that Canada is purely a victim of the horrible Donald Trump who is unilaterally attacking a friendly and faithful neighbor to our north, however they are obfuscating the reality that this is not a unilateral attack.

    Canada is not the innocent victim, nor does Canada hold the moral high-ground. For that matter neither does the United States. Canada takes advantage of the United States, similar to a parasite to a larger host and the United States takes advantage of the size difference (population and economic, not geographical).

    The author, is asking a question that is not relevant and does not demonstrate what the author is implying. If Canada falling behind, yes it is relative to the USA. Is Canada taking advantage of the USA, yes it is. Does Canada have unfair trade practices, yes they do.

    Are the new tariffs imposed by either Canada or the USA wise or justified, no they are not.

    1. MWAocdoc   2 months ago

      I have no doubt that Canada and Europe support their own industries economically in a way that they frequently object to the US doing for our industries. The only acceptable system is free trade, but Europe gets around truly free trade by imposing "quality" regulations at higher levels than American regulations. If an American producers wants to sell in Europe they have to sell at higher prices there to cover the extra production costs of meeting their higher standards. It would be disingenuous to allege that that alone violates free trade. Only punitive tariffs or import quotas violate free trade, but government price supports of their industries also violates free trade principles.

  18. DirkT   2 months ago

    When Elon Musk walks into an American bar, everyone in the bar is a billionaire, per capita.

  19. Heresolong   2 months ago

    Turns out that you can both rip people off AND fail. Why should we subsidize their poor choices?

    On a related note they are buying Chinese stuff and passing it off as Canadian to help get around US tariffs on China. So dishonest as well.

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