The hidden takeover of our economy—and 5 things we can do about it
By Matthew Mendelsohn and Rachel Wasserman | Part of our Special Series: Always Canada. Never 51.
Even before Trump’s tariff and annexation threats, something troubling was happening in our economy—a slow but relentless consolidation of Canada’s industries through serial acquisitions.
Through this strategy, large firms—often U.S.-based—buy up smaller businesses in a fragmented market. Unlike big mergers that trigger regulatory scrutiny, these smaller deals fall below the radar, leading to the accumulation of unchecked market power over time. The result? Rising prices, fewer choices for consumers, deteriorating job quality and entire industries concentrated in fewer hands.
When large, publicly traded companies engage in patterns of serial acquisitions, their public disclosure requirements increase the likelihood that acquisition patterns can be surfaced and scrutinized.
In contrast, private equity (PE) firms focused on buyouts are not subject to similar disclosure requirements. Coupled with the fact that most PE deals fall below the Competition Bureau’s merger notification threshold of $93 million—83% of disclosed PE deals in 2024 were under $20 million—this leaves limited avenues for monitoring and addressing this consolidation pattern. PE firms play such a significant role in serial acquisitions that former American Federal Trade Commission (FTC) Chair Rohit Chopra specifically called for increased scrutiny of their activities.
Today, Canada’s main streets are more likely to feature American chains and less likely to be locally owned. According to a recent joint CBC Marketplace and Fifth Estate investigation, before 2010, almost all veterinary clinics in Canada were owned by a vet. Today, more than half of all emergency and specialty animal hospitals and more than 20 per cent of all vet clinics are owned by six corporations. The investigation involved undercover visits to corporately owned clinics that revealed higher-than-average services costs.
And it’s not just vet clinics. Funeral services are becoming monopolized by large corporations, with prices at corporate-owned facilities estimated to be 42% higher than at independent providers. The care economy—including daycares, pharmacies and long-term care homes—is increasingly controlled by PE firms, often at the expense of affordability and service quality.
This isn’t just bad for Canadian consumers—it’s bad for workers. Research shows that higher market concentration reduces wages and hiring, eroding economic mobility. The companies making these acquisitions aren’t investing in innovation or creating or growing new local businesses. They’re amassing market power and extracting as much wealth as possible, leaving fewer opportunities for small businesses to thrive and creating higher barriers for new entrepreneurs.
With the current economic assault on the Canadian economy from the Trump administration, coupled with exchange-rate advantages and low interest rates, this is no doubt a buying opportunity for foreign investors. The risk is that we will come out of this period with even more economic vulnerability and less ownership of our own economy.
We don’t have to accept this creeping consolidation as inevitable. To take back the Canadian economy from this hidden takeover, and stop it from accelerating, governments can make some urgent changes.
1. Amend the Competition Act to put serial acquisitions on the radar
Innovation, Science and Economic Development Canada (ISED) should make additional amendments to the Competition Act focused on increasing its capacity to identify mergers. As Social Capital Partners argued in its 2023 submission on competition policy, the merger notification threshold should be significantly lowered and based on transaction value, rather than revenue or assets in Canada. Additionally, we recommend introducing requirements that any acquirer making more than four acquisitions in a 12-month period should be required to file for each subsequent transaction until such time as they do not make four acquisitions in a 12-month period.
2. Call out serial acquisitions in the Merger Enforcement Guidelines
The Competition Bureau should update its Merger Enforcement Guidelines to explicitly identify serial acquisitions as an area of potential concern and indicate that when a merger is part of a series of multiple acquisitions, the bureau may examine the whole series. This effort would send a clear signal that the bureau is dedicated to addressing anti-competitive behaviour in all forms and would ensure that Canadian merger enforcement guidelines are consistent with the U.S. FTC/Department of Justice (DOJ)’s 2023 Merger Guidelines on the topic of serial acquisitions.
3. Gather better data on serial acquisitions
Our Competition Bureau should prioritize proactive information gathering on serial acquisitions in Canada. This might include an open call on the impact of serial acquisitions, market studies in sectors most vulnerable to serial acquisitions and/or new processes for tracking and understanding the impact of PE activity on Canadian economic resilience.
4. Inform the public about mergers in plain language
The Competition Bureau should work to ensure that information and data related to mergers is more accessible to a broad audience. Canadians are more interested in competition policy than ever before. It’s no longer just lawyers and consultants delving into this content, but working Canadians who are concerned with the impact of mergers and acquisitions on their wages, consumer choices and economic well-being. Information in plain language should be available across public communication channels, and the report of merger reviews should be updated to include clear summaries of the proposed mergers and any decisions.
This information should be relevant to investment-attraction offices at all levels of government. As Canada refocuses efforts on building a fair and independent economy that’s less reliant on the U.S., we need to stop measuring investment-attraction success based on total number of dollars, and focus instead on investments that build, versus diminish, economic resilience.
5. Require alerts to changes in business ownership
Provincial/territorial governments and professional regulatory colleges should adopt policies that require regulated professionals, such as veterinarians, to alert their clients of a change in ownership. This would ensure that customers are fully informed on business ownership and would enhance transparency around acquisition trends.
We already face economic assault from the south—we cannot accept unchecked serial acquisitions as a tactic in this economic war against us. These “rollups” of local businesses don’t create jobs and they don’t drive innovation.
If we don’t act now, the price we pay won’t just be higher vet bills, funeral costs or daycare fees—it will be a future with fewer career opportunities, asset-building opportunities and less economic security. The Canadian government must make it a policy priority to prevent American investors from buying up the Canadian economy.
Canada needs a new civil defence corps | The Tyee
By Peter MacLeod, MASS LBP | This post first appeared in The Tyee
When Sweden joined NATO last year, it wasn’t a decision made lightly. Swedes are famously independent, deeply pragmatic and serious about their security. During the Cold War, they built a robust civil defence system, training their population in preparedness, stockpiling critical supplies and ensuring that in any crisis — natural or man-made — Sweden could stand on its own feet.
But after the Berlin Wall fell, Sweden, like much of the West, took a “peace dividend.” Civil defence was scaled back and military spending shrank. That all changed in 2017. Seeing the world shift under its feet, Sweden reinstated partial conscription, restarted preparedness training and began fortifying its infrastructure.
Today, following the reactivation of its Psychological Defence Agency, every Swedish household receives a booklet titled “If Crisis or War Comes,” outlining what to do in an emergency. The country has retrained thousands of reservists and rebuilt its civil protection programs — not because it wants war, but because it takes security seriously.
Canada should be doing the same.
The US is changing and Canada must be ready
The threats facing Canada are real, and they are growing. Russia’s invasion of Ukraine is not just a European conflict — it is a reminder that brute force is back on the table. NATO has had to rearm, and democracies are waking up to the fact that peace requires preparation.
Meanwhile, the United States is accelerating towards a period of profound political uncertainty. Donald Trump has made it clear that he views Canada as little more than a resource colony, proposing economic policies that could cripple our industries, tear up our trade agreements and undermine our sovereignty.
But a second Trump presidency is emphatically not like the first. In foreign policy, as in business, Trump does not deal with weaker counterparts — he dominates them. When engaging with countries that lack the leverage to push back, he is not transactional; he is predatory. His negotiations are not about mutual benefit but about extracting maximum advantage, imposing terms that serve his interests alone.
The shift from ally to adversary could happen overnight, as a protectionist United States looks at Canada’s vast energy reserves, fresh water and strategic Arctic position and sees weakness. Canadians must recognize that the luxury of assuming our security is someone else’s responsibility is over.
We must be strong enough to push back, resilient enough to survive cyberwarfare and economic coercion — including Tuesday’s arbitrary imposition of illegal tariffs. We must be prepared to defend our sovereignty — not just with military spending, but with a population that is engaged, trained and ready.
Pause for a moment and imagine the skills or time you could bring — whether it’s first aid, co-ordination and logistics, communications, engineering, IT support, counselling and caregiving or any other expertise — to contribute to our collective security and resilience if called upon.
What is civil defence, and why does it matter?
Civil defence is the ability of an entire society to withstand crisis — whether military, cyber, economic or environmental. It means that in the event of an emergency, the population is trained, infrastructure is resilient and communities can function without immediate government assistance.
Canada once had a civil defence program. During the Cold War, we built fallout shelters, trained civilians in emergency response and ensured our critical infrastructure could endure a nuclear strike. Today, we face a different but no less serious threat — cyberwarfare, disinformation, economic destabilization and geopolitical conflict over the Arctic. Just as Canada prepared for nuclear fallout in the 1960s, we must prepare for the crises ahead.
What would Canadians actually do?
A modern civil defence program is fundamentally about national participation — mobilizing the talents and capabilities of an entire population. In Sweden and Finland, civil defence is built around training, community preparedness and personal responsibility. Every adult is expected to have the knowledge and basic skills to help in an emergency — whether that’s first aid, defending critical infrastructure or organizing local response teams.
Here’s what it could look like in Canada:
Universal civil defence training: Every Canadian should receive basic training in first aid, emergency preparedness and cybersecurity. This would be mandatory for Grade 12 students and newcomers, with local, in-person and online options for all adults.
Optional defence skills track: Similar to the Swiss approach, tens of thousands of Canadians could receive additional firearms training, tactical first aid, search-and-rescue skills and survival techniques — not to militarize society, but to ensure that we can take care of ourselves.
Reserve forces expansion: We must add at least 20,000 reservists to ensure we have a force ready to respond to crises — military or otherwise — aligning us more closely with NATO norms and attainable given our population.
Cyber-resilience training: Every Canadian should be able to recognize and defend against cyberthreats, disinformation campaigns and economic coercion. Germany has invested in tackling disinformation by training its population in media literacy, foreign influence detection and digital resilience — Canada must do the same.
National youth service program: The existing Canadian Service Corps is far too limited with only a few thousand young Canadians participating each year. We should dramatically expand national service opportunities, offering paid programs in trades, emergency management and infrastructure resilience, allowing young Canadians to develop valuable skills and experience other parts of the country while actively contributing to national security.
Arctic protection and Indigenous leadership: As global powers eye the Arctic, Canada must train more Indigenous rangers and local defence units to safeguard the North. Inuit and other Indigenous communities must be at the centre of Arctic security planning, ensuring they have the resources to defend their land and way of life.
Readiness strengthens pride
A civil defence program isn’t just about protecting against foreign threats — it’s about building a stronger, more confident Canada.
Last month, Canada erupted with joyful patriotism after our victory in the 4 Nations hockey final. Bars, streets and living rooms were filled with people waving flags, chanting “Let’s go, Canada!” and coming together in the kind of unifying moment that reminds us who we are. Canadians are not a passive people. We don’t sit back and let history happen to us. We leap to our feet — on the ice or during a crisis.
Imagine if we channelled that energy into national readiness.
If Canada were to build a civil defence program on the scale of those in Sweden or Finland, the numbers would be game-changing.
In Sweden, 350,000 people — or about 3.5 per cent of the population — actively participate in voluntary defence organizations, learning emergency response, cybersecurity and national resilience skills. In Finland, over 70 per cent of men complete military service, and the country maintains a reservist force of nearly one million for a population of just 5.5 million.
If Canada matched Sweden’s per capita engagement, over 1.4 million Canadians would take part in civil defence programs at a cost of less than $2 billion annually. If we followed Finland’s model, we could train over 28 million people — not just making our adversaries think twice but ensuring that Canada is never seen as an easy target.
We must meet this moment
Right now, Canada is coasting. Our military is underfunded. Our cyberdefences are vulnerable. Only 0.07 per cent of Canadians are in our Reserve Force — one of the lowest rates in NATO. And unlike almost every other NATO country, we have no universal civil defence training. In a major crisis, we’d be left scrambling. That’s not who we are.
Canada also needs to increase its conventional defence spending to at least two per cent of GDP in line with our NATO commitments. That means modernizing our military, strengthening our Arctic presence and ensuring our national security policy reflects the realities of a world where authoritarian regimes are willing to use force. Our allies are watching. More importantly, so are our adversaries. A well-equipped military backed by a prepared civilian population is not a provocation — it is the foundation of true deterrence.
Canadians have always stepped up when it matters. But it shouldn’t take a crisis to get us moving. The time to prepare is now, while we still have the ability to do so on our own terms.
The world has changed. Canada, it’s time to get ready.
Four ways to keep Canadian businesses in Canadian hands
By Matthew Mendelsohn and Jon Shell | Part of our Special Series: Always Canada. Never 51.
The nature of the threat that Trump represents is becoming clearer. One aspect that requires urgent action is the risk that Canadians could lose even more control over our own economy and become even more vulnerable in the coming months. Although Canadians want to become less dependent on the U.S., there are forces at play that are pushing in the opposite direction.
Given a low Canadian dollar and likely lower interest rates, there is no doubt there will be many American investors looking to come and buy up more of our businesses and other assets. This could further rob Canadians of our economic sovereignty.
Canada has historically sought out Foreign Direct Investment (FDI). The Canadian government regularly touts increased investment flows into Canada as a positive sign for our economy. But it is important to differentiate between investment that builds up our economy and investment that sells our assets, industrial capacity and intellectual property to foreign investors and leaves us weaker. The latter extracts wealth and weakens Canada over the long term.
Canada is also in the midst of the Silver Tsunami – a wave of retiring business owners looking to sell their businesses and secure their retirement. Canadian business owners of course should have retirement security, but many of these entrepreneurs would love to keep their businesses in local Canadian hands.
So, some kinds of FDI are bad, and some mergers and acquisitions have negative national security implications. Even before Trump took office, these combined trends demanded an urgent and serious response. Today, they are a high-level threat to our economic security. We need to change fast.
Many American investors and firms are looking to buy up Canadian assets at the moment. And the overt policy of the U.S. government is to use economic pressure to threaten Canadian sovereignty and put Canadian businesses in a position where they will need to sell. Many businesses will face liquidity issues and will see the value of their assets decline and American finance will sniff out these opportunities.
Despite the fact that Canadian governments, business leaders, workers and Canadians from across the country all say they want to be less economically vulnerable, there is a real chance that two years from now even more of the Canadian economy and our assets will be owned by American investors who don’t care at all about the health of our economy or communities.
Here are four ideas on how to keep ownership of Canadian assets in Canadian hands. Every detail has not been worked out, but these ideas are actionable and could prevent American finance from gobbling up more of the Canadian economy. We hope policymakers can build out these ideas and develop more of them – we are sure there are others!
1. Make it easier for new Canadian entrepreneurs to buy existing Canadian businesses from owners who want to retire.
We are facing a wave of business retirements and Canada needs more entrepreneurs. The Canadian government can do more to facilitate ‘entrepreneurship through acquisition’ – that is, helping new entrepreneurs buy existing businesses.
Canada needs more entrepreneurs who want to build, rebuild and grow businesses that contribute value to their communities. The last couple of decades have seen a change in the kind of entrepreneurship that is prioritized, with many entrepreneurs focusing on ‘exit’ – that is, building a business with the goal of selling it to a larger financial player. Today, we need to help young entrepreneurs buy businesses that they want to run for the long haul.
The federal government should significantly de-risk purchases of existing businesses by new Canadian independent entrepreneurs. This could be done through amendments to the Small Business Financing Program, directing the Business Development Bank of Canada (BDC) to prioritize this type of transaction or the launch of a significant new loan guarantee program aimed specifically at entrepreneurship through acquisition.
2. Invest patient capital into Canadian manufacturers and other vulnerable sectors through a new, independently managed sovereign buy-out fund.
Some manufacturers are about to feel pain from U.S. tariffs. Some will be at risk of closing or will feel pressure to relocate or sell to foreign investors. In order to diversify their exports away from the U.S., they will need to re-tool and make new investments. Some won’t be able to do that. We need a policy response to ensure they remain liquid, sovereign and have the capital to withstand the current crisis and re-tool for domestic needs and global markets.
The federal government should work with our large pension funds and invest together in a new fund that would buy or invest in existing manufacturing firms that run into trouble. The federal government should guarantee a benchmark rate of return for the pension funds, so that Canadian pension dollars are protected. The fund should be run independently by those with experience in manufacturing, finance and private equity with the goal of building an advanced and resilient manufacturing sector necessary for a more prosperous, independent Canada. Such a project will require permanent, patient capital—capital managed for long-term value creation instead of short-term gains.
3. Make it easier for business owners to sell to their employees.
Employee Ownership Trusts (EOTs) were created in Canada last year as a vehicle for business owners to more easily sell their businesses to their employees. This has the potential to unleash a wave of business transitions and thousands of new worker-owners, as it has in the U.K. But obstacles remain and workers often compete with those seeking to buy up Canadian assets.
The government should clarify the rules around EOTs, some of which are creating uncertainty amongst lawyers, accountants, advisors and business owners. Many entrepreneurs want to sell to their employees, but uncertainty around who is eligible and whether tax exemptions will expire are inhibiting transactions. There are easy fixes for these snags, and we must not delay: the federal government should clarify the rules as soon as possible so that businesses can be sold to their employees. Canadian pension funds should also invest in a fund to facilitate employee-ownership transitions, with the federal government guaranteeing a benchmark rate of return.
4. Do not allow American purchases of Canadian businesses.
Foreign purchases of Canadian firms are reviewed under the Investment Canada Act under certain circumstances and are sometimes subjected to a national security screen. Small acquisitions are not reviewed, which is appropriate in normal times, but now represents a threat to Canadian economic sovereignty.
The current legislation allows large foreign investors to serially acquire smaller firms and, over time, consolidate industries in foreign hands. The risk of this is now even greater, as many Canadian business owners might be anxious to sell and foreign investors currently have exchange-rate advantages.
Changes to the Investment Canada Act were passed in 2024, but we need immediate new targeted changes to respond to the current environment. Those should include an ability to review smaller transactions and an emergency power that can be invoked by the government to put on hold all foreign acquisitions for a period of time. In conjunction with the earlier options, it would be possible for Canadian funds to step in and acquire businesses instead, with the federal government offering some kinds of guarantees.
These are some ideas that should be investigated. They all have a reasonable chance of enhancing economic resilience, creating wealth-building opportunities for Canadian workers and entrepreneurs and increasing Canadian economic sovereignty. We are sure there are others. Let’s get to work on them yesterday.
Trump’s tariff threats expose Canada’s internal monopoly problem | Policy Options
By Keldon Bester, the Canadian Anti-Monopoly Project (CAMP). This post first appeared in Policy Options.
The prospect of a potential pile-up of U.S. tariffs on Canadian exports has spurred discussion around potentially appeasing the White House by opening our markets to American companies.
Many see this as a potential win-win: avoiding tariffs while creating competition in traditionally protected sectors. But these proposals often gloss over the reality that Canada needs to look within when it comes to solving the competition problems in our marketplaces.
Flying the friendly (but overpriced) skies
Canadians face a number of competition pain points across the economy, beginning with air travel. There is ample evidence of high prices, reduced service and numerous personal accounts from Canadian air travellers of shabby treatment.
In 2024, Canada’s two major carriers – Air Canada and WestJet – were found near the bottom of consumer satisfaction and on-time performance rankings. Understandably, it becomes tempting to gaze longingly to the south at the U.S. and its air travel market featuring four major carriers and a host of regional lines and wonder why they can’t fly here, too.
It is reasonable to presume a protectionist barrier is to blame, whether it be cabotage restrictions or a cap on foreign ownership of domestic airlines. The real reason, however, lies in Canada’s sprawling geography and the economics of air travel more broadly.
U.S. carrier competition is not going to save Canadians for the same reason U.S. carriers are not saving Americans. After decades of consolidation, U.S. carriers are pulling out of routes to small and mid-size American cities with much higher potential passenger volumes than their Canadian equivalents. Today, U.S. airlines already service the Canadian routes they want through their own hubs. The idea that U.S. carriers already pulling out of much larger domestic routes would jump to provide service on lower-traffic international routes is mistaken.
You can take that to the bank
A similar situation is at play in Canada’s notoriously stable and profitable oligopoly banking sector.
Taking President Donald Trump’s recent call with Prime Minister Justin Trudeau at face value, one might be led to believe that Canadian banks are protected by restrictions limiting foreign involvement.
In fact, (relatively) recent history demonstrates otherwise. The sale of HSBC Canada to RBC in 2024 and ING Direct to Scotiabank in 2012 are just two examples of foreign banks that operated in Canada before pulling up stakes.
The Canadian banking sector is heavily regulated with an exceedingly high barrier to entry, including an important limit on what percentage of a bank can be held by a single entity, but these restrictions apply equally whether a company is foreign or domestic. Attempts by HSBC and ING Direct to grow in Canada show our banking sector needs no border wall to thwart international competition.
Internet impediment
A perennial pain point for Canadians where restrictions on foreign ownership actually do exist is the sky-high cost we pay for internet connectivity. International telecoms are barred from acquiring players with over 10 per cent market share, and no provisions exist to allow foreign service providers to use incumbent infrastructure to compete for customers.
Absent these barriers, it is possible to imagine a player such as T-Mobile, which recently brought Starlink satellite internet to market in the U.S., competing in Canada and disrupting the status quo and driving down prices through competition.
Yet, there is nothing uniquely avaricious about our homegrown telecom companies. Telecom executives in other countries would like to get away with charging high prices for their services if they could.
But more intense competition in their own markets instead keeps them delivering for customers. Despite recent claims to the contrary by companies like Telus, Canadians should not expect much change without altering the underlying competitive structure of the Canadian telecom market.
In addition to its limited potential for competitive disruption, foreign ownership of telecommunications also raises the now pressing issue of preserving Canada’s sovereignty. American tech firms already dominate how Canadians connect with one another and access information online. Allowing them to integrate deeper into our communications infrastructure risks further undermining the ability of Canadians to communicate freely with one another amid heightened global uncertainty.
Fenced-off food supply
Along with the banking sector, access to Canada’s supply-managed agricultural markets has been mentioned as trade issues by Trump, his Commerce Secretary and the U.S. Trade Representative. From the perspective of consumers, there is no doubt that opening these markets to competition has the potential to lower prices and increase variety for consumers.
But recent price hikes in U.S. supermarkets and the behaviour of Trump 2.0 are reminders of the value of independent and sovereign food systems.
The American food system has undergone even more intense consolidation than its Canadian counterparts. The consequences of that consolidation are beginning to show up on grocery shelves.
Following the explosion of avian flu that has ravaged America’s massive factory chicken farms, the average cost of a dozen eggs has risen above US$4, with shoppers in states like California seeing prices as high as US$10. While maintaining domestic supply has typically resulted in higher prices, Canada’s supply chain has seen less consolidation, and Canadians do not need to worry about continuous access to these commodities, no matter the mood of the U.S. president.
Embracing competitive creativity
In each case, from airlines to egg crates, Canadians need to do the hard work of internal reform to support vibrant markets. With our closest trading neighbour now re-evaluating its relationship with its allies, this task has become more pressing than ever before.
This begins by ensuring that public regulation of markets allows new competitors to grow and thrive and that the private regulation by oligopolies does not hamper this process.
As a starting point, Canada’s newly reformed competition law must be assertively enforced. Beyond that, we need to begin thinking more deeply about how markets work and embracing creativity in how Canadians can get the best out of them.
In airlines it could mean removing fees and orienting regulation to better support smaller carriers suited for rural and remote service. The banking sector could see the opening of financial infrastructure and secure consumer data to domestic upstarts seeking to challenge the big banks.
In telecom, we can invest in new technologies to connect remote communities while ensuring the sovereignty of our communications systems. In our food system, reimagining support for a broader domestic supply agenda has the potential to offer greater affordability and choice for consumers while building resiliency.
Trump’s tariff threat has opened the door for economic thinking that pushes us, whether we like it or not, beyond the norms of business as usual in Canada over the past 40 years. But Canadians cannot expect ‘one weird trick’ – a phrase popularized by clickbait ads promising effortless solutions – to fix our economy.
Policymakers need to move quickly and enact reforms unlocking domestic competition rather than relying on foreign competitors to save the day. To build a more resilient and independent country, the hard work starts at home.
Canada is a way better bet than the United States right now
By Matthew Mendelsohn | Part of our Special Series: Always Canada. Never 51.
Eight weeks ago, many in Canada were preparing for a trade war with the United States and were looking for compromises we could make to avoid it. The media were filled with stories about workers about to lose their jobs and businesses thinking about relocating to the U.S. to avoid tariffs.
That seems like a long time ago.
There are real risks to Canada. But we’re not talking nearly enough about the risks of doing business or investing in the U.S.
I remember learning about risk and uncertainty a long time ago. We discussed these concepts in the context of investing in emerging markets or unstable democracies. I remember learning about the “prudent investor” rule and fiduciary duty to shareholders.
Doing business in an unstable, retreating democracy governed by the whims of erratic billionaires, career criminals and Russian assets is not a place you should want to invest. It isn’t prudent.
Large parts of the U.S. economy are becoming more extractive and predatory, with the same uncertainties that one finds in other authoritarian systems – corruption, cronyism, corporate blackmail, extortion, civic unrest and threats to one’s livelihood and civil rights.
These are new risks for businesses and investors in the U.S. How does one calibrate the risk that comes from a president who might try to shake you down? Or Elon Musk waking up tomorrow and canceling your firm’s contract, insisting that Starlink can do the work better?
I’m not a financial analyst and I don’t know how one would quantify these risks. But we seem to be in black swan territory. The risk of investing in the U.S. today feels a lot like investing in Russia 20 years ago. Yes, wealthy and powerful companies will probably become even more wealthy and powerful. But it will be more difficult for most companies to compete in a rigged market, with success determined by fealty to the regime rather than hard work, innovation or ingenuity.
The rules of commerce that we have taken for granted in democratic capitalist societies no longer apply in the U.S. Call their emerging model of capitalism what you will – gangster, crony, disaster, techno, late-stage – there is no doubt there is money to be made if you get in at the right time with the right people. But it is highly volatile and unpredictable.
The impact of what is going on today – for example, the hollowing out of state capacity to perform the basic functions of democratic government – will grow.
I don’t want to understate the risks to Canadian jobs and businesses right now. Many businesses are facing very difficult choices. But we need to talk more openly about risks in the U.S., and the risk to Canadians in continuing to tie ourselves to an unstable, authoritarian power.
The American version of capitalism and democracy currently on display is not one to which we should aspire. It is a result of a capitalist and democratic model that produces extreme inequality, concentrated power and inadequately funded public services.
What can we do? First, a prudent person would stop arming those who want to do us harm. Canadian pension funds and all holders of institutional capital should gradually reduce their exposure to the unstable American economy.
“We need to talk more openly about risks in the U.S., and the risk to Canadians in continuing to tie ourselves to an unstable, authoritarian power.”
Second, we need to double down on our commitments to diversity, inclusion and democratic capitalism. I believe that the things we claimed are true are in fact true: diversity around the management table and employees with purpose produce better outcomes for businesses and society. I believe it is possible to build positive-sum outcomes and shared value within properly regulated capitalist markets.
Third, we need to defend the rules and institutions that make democracies work for businesses and investors: the independent judiciary, the non-partisan public service, the rule of law rather than the rule of the autocrat, the independent press, competitive open markets, an independent military and police, strong labour unions and social protections. We need to protect all of these in Canada. The rule of law and the ability to enforce contracts are not sexy, but they make capitalism work.
And fourth, all of our institutions need to look at how we attract entrepreneurs, technologists, scientific researchers and others who want to escape our southern neighbour. Many will be persecuted, and many will want to do their work within the context of a healthier democracy and economy. I get emails regularly from people who want to bring their expertise to Canada. We should mobilize across society to help people do that.
Canada’s value proposition today is the same as it was last year and it aligns with the values most Canadians hold, even if we execute on them imperfectly: diversity, inclusion, freedom, equality, democracy, respect and reconciliation. I would rather invest in a country that strives to uphold those values and build an inclusive, democratic capitalist system than invest in the uncertain, volatile mess that is the United States right now.
Canadian foundations must invest more in Canada and invest for local impact
By Matthew Mendelsohn | Part of our Special Series: Always Canada. Never 51.
It is now obvious that the United States under Donald Trump has changed in ways that threaten our economic well-being.
Canadians get this. Many Canadians and institutions are supporting local businesses and producers. But buying Canadian is not enough. We also need to be investing Canadian.
Every institution that holds capital, power and influence should invest in Canada’s long-term resilience, growth and sovereignty. This means investing in Canadian businesses and projects, and investing for social, environmental or local impact.
Foundations in Canada, both private and community, hold hundreds of billions of dollars in their endowments. Endowments held by our universities, colleges, hospitals and other public-purpose institutions, including our philanthropic foundations and those who manage our donor advised funds, need to reorient their investment practices to meet this moment. For these anchor institutions in our communities, investing in long-term resilience is not just about doing their part—it is core to the success of their missions.
There are historic reasons why many holders of capital don’t invest much in Canada, and reasons why the impact-investing movement has not had the transformative impact that many hoped for.
Many investment managers and advisors to foundations claim that they do not want to be over-exposed to the Canadian market to ensure balance, returns and the preservation of their capital. They have acted as a “prudent person” would, seeking strong, risk-adjusted returns so that they can continue their grant making.
It is also true that it has historically been difficult to find sizeable investments that deliver social impact. When Social Capital Partners started impact investing more than 20 years ago, there was little infrastructure to support investors who wanted to generate returns while also delivering positive social, environmental or local impact. There was also not a pipeline of investments.
But this has now changed. Today, there are many investment vehicles, funds and managers of all kinds who know how to invest for impact in Canada. We now have an infrastructure to support investments across asset classes that can deliver social or environmental impact. The federal government’s $755-million investment in the Social Finance Fund has also supported the maturation of this ecosystem.
Foundations need to target transformative impact now, as the communities they serve are under threat. The boards of foundations should mandate that their investment managers find impact-oriented investments and start the transition right away, and if they can’t or won’t hit targets to move their investments towards impact within three years, they should be replaced with those who have the expertise to do so.
Most of the philanthropic capital in Canada today is invested in a variety of asset classes, with the goal of achieving risk-adjusted rates of return, but not impact. If American equities like Tesla or Meta provide better returns than affordable housing or Canadian medium-sized tech companies, well then, that’s where investments have been going.
Foundations need to target transformative impact now, as the communities they serve are under threat.
However, unlike 20 years ago, investment managers today can find investments at scale that deliver positive social and environmental impact across asset classes, including public markets, private markets, debt, affordable housing and infrastructure. Investment managers such as Rally Assets, TwinRiver Capital and Clear Skies Investment Management, among others, have experience managing large investments and delivering returns across multiple bottom lines.
There is room to grow the range and scale of impact investment opportunities; holders of philanthropic capital can and should push for more. They need to use their power to shape the investment market and communicate that we need to catch up to new geopolitical realities. If foundations insist on impact, investment managers will find suitable investments that support Canadians, our communities and our businesses. Although many foundations have carve-outs that they use to invest in Canada or for impact, those need to be bigger.
Foundations should also devote some portion of their investment capital to smaller initiatives, with an aim to grow them. Investment funds for local businesses like Nova Scotia’s Community Economic Development Investment Fund (CEDIF) model should be scaled across the country, and endowments can use these kinds of fund structures to invest in their local business and social-enterprise ecosystem.
Canadian foundations should insist that their investment managers:
- diversify globally by decreasing exposure to the U.S.,
- actively seek Canadian opportunities, and
- invest for impact across asset classes in ways that contribute to economic resilience and community well-being.
Governments should support this shift. Government can be explicit in clarifying that fiduciary responsibility entails making investments that bolster the long-term resiliency of the Canadian economy. They should also say they will tax the investment earnings from endowments if those investments are not focused on impact within three years, which gives foundations and investment managers time to transition. These changes will shift incentives and shape investment markets towards building Canadian wealth, sovereignty and economic growth.
Foundations can use their power to accelerate the maturation of Canada’s impact-investing market in ways that support our economic resilience, growth and sovereignty, while delivering financial returns sufficient to ensure their sustainability. Doing so is prudent in the broadest sense of the word. Investing in companies that undermine the goals of the foundation or our democratic institutions is not prudent in any sense of the word.
Canada’s economy is being attacked, and our foundations sit on huge pools of capital. They need to do more to support Canadian communities at this time of geopolitical and economic threat.
The answer to economic threats: Always Canada. Never 51.
By Matthew Mendelsohn | Part of our Special Series: Always Canada. Never 51.
The Trump administration is engaged in an economic war of aggression against Canadians. Every day it becomes clearer that the United States is currently a threat to Canada and other democracies around the world. While we wish our American friends well and hope the U.S. changes course, that is not in our hands. Canadians need to prepare.
At Social Capital Partners, we focus on creating pathways for working people to build wealth, own assets and gain economic security. It has been our assumption that extreme wealth inequality and highly concentrated ownership of the economy lead to poor economic performance, civic unrest and democratic decline.
Nothing from the past few weeks leads us to believe differently. When most people don’t have a realistic chance to build economic security, and when they see a system stacked in favour of those who already possess wealth and power, bad stuff happens.
But good stuff is happening too. There is now a wide consensus that we need to be less economically vulnerable to Trump’s economic threats. We are buying more Canadian, investing more in Canada and putting aside relatively minor partisan and regional differences to stand in solidarity with one another.
We are likely at the beginning of a whole-of-society project as Canadians figure out how to mobilize collectively to reorient our policies, practices and investments towards building a stronger, more independent economy in the face of geopolitical threat.
During the free-trade debate of the 1988 Canadian election, Prime Minister Turner famously said that once our economic levers go, our political independence would follow. Canadians have mostly ignored that warning over the past 35 years and our businesses have oriented themselves to buy and sell from the American market, with treaty assurances about how that trade will work. But the current administration has no problem ignoring those agreements.
We are more vulnerable today than we were fifty years ago. We are a branch plant economy, and many of our largest employers do their research and development and hold their IP outside Canada. Many of our businesses have been bought up by American private-equity funds, our main streets are dominated by American chains and many of our largest natural resource companies are no longer owned by Canadians. And we don’t talk about these facts enough because our independent Canadian media has also been bought up by American hedge funds and cannibalized by American digital tech platforms.
Those currently waging an information war against us are hoping to destabilize and divide us, and instill a sense of resignation. But from across the country and across the political spectrum, the opposite is happening. Our commitment to unity has been overwhelming and the realization that we need to build a stronger, more dynamic, less dependent Canadian economy has become obvious. But we need to get busy.
Today, Social Capital Partners is launching a series of policy ideas that will help change systems and grow a more resilient, diversified and independent Canadian economy. Many of our ideas are for governments, but they are also directed towards others who hold wealth and power. We believe that those who control large pools of investment capital have a responsibility to put their resources to work for Canadian communities under threat.
Canada needs to try things we haven’t tried before. We need to do things we know we should have done a long time ago. We need to pursue ideas where the evidence base is strong and where we have straightforward policy and legislative levers. And we also need to try some crazy stuff.
Today, Social Capital Partners is launching a series of policy ideas that will help change systems and grow a more resilient, diversified and independent Canadian economy.
All sectors need to get involved, and government must be there to support and de-risk those efforts. Some things might not work—but failing to act quickly and ambitiously is by far the bigger risk.
Our series focuses on policy ideas that:
- Support Canadian economic sovereignty, advance ownership for Canadians and reduce dependence on the U.S.
- Advance the interests of workers, small businesses, the economically vulnerable and young Canadians who have known for a long time that our economy is not working well for them
- Include sufficient detail to be actionable so we can begin to implement them quickly
Canada is a big, powerful, wealthy country. We are at a moment of historic and geopolitical transition, and we need to seize this opportunity to build an innovative, sovereign economy that builds wealth for working people and supports a strong, inclusive democracy.
So, under economic threat from our powerful neighbour, what do we choose? Always Canada. Never 51.
Feb. 25 Webinar | What about cities? Building economic resilience amidst a new Canada-U.S. order
Join moderator Shauna Sylvester for an Urban Climate Leadership online webinar featuring Mary Rowe, CEO of Canadian Urban Institute, Mairin Loewen, Assoc. Program Director at UCL and Matthew Mendelsohn, CEO at Social Capital Partners in discussion on the impact of U.S. tariffs on Canadian cities.
February 25, 2025 from 1:00 – 2:00 p.m. ET.
Panelists
Mairin Loewen
Associate Program Director, Urban Climate Leadership
Matthew Mendelsohn
CEO, Social Capital Partners
Moderator
Shauna Sylvester
Lead, Urban Climate Leadership
Feb. 14 Webinar | When Global Hits Local
Global trade policies have real, immediate consequences for Canada’s main streets. In the face of America’s economic assault, Canada’s local businesses, municipalities and economic leaders must navigate uncertainty while ensuring community resilience. How will tariffs impact small businesses, supply chains and local economies? What strategies can cities use to adapt and strengthen their economic foundations?
Join SCP CEO Matthew Mendelsohn and a panel of experts at Canadian Urban Institute’s CityTalk Live, Feb. 14, 12:00 – 1:00 p.m. ET for a discussion of practical, community-driven solutions to bolster local economies in the face of global shifts.
Panelists
Justin Towndale
Mayor, City of Cornwall
Matthew Mendelsohn
CEO, Social Capital Partners
Rino Bortolin
Strategic Advisor & Project Manager, Windsor Law Centre for Cities
Tori Williamson
COO, Buy Social Canada
Moderator
Mary W. Rowe
CEO, Canadian Urban Institute
The strength within: Some economists say we can't count on fair and open trade with the U.S. anymore. Is it time for Canada to look inward instead? | Toronto Star
By Ana Pereira | The Toronto Star
When U.S. President Donald Trump threatened to launch a full-blown trade war with its closest ally, many Canadians felt as if their best friend had suddenly turned around and stabbed them in the back.
Trump’s string of accusations, along with increasingly hostile suggestions that the U.S. annex Canada as “the 51st state,” have led many to pledge boycotts of American products. The majority of Canadians now support calling on the government to reduce our reliance on the U.S. as a trading partner, according to a recent poll by the Angus Reid Institute of more than 1,800 adults.
Patriotism aside, there are solid economic reasons why Canada might want to consider reducing trade with America, according to economists. Trump’s threats have introduced a major source of uncertainty in a decades-old trade partnership that saw Canada give up some of its independence in exchange for economic prosperity and stability.
It’s a relationship that has benefitted both economies, with nearly 80 per cent of Canadian exports currently ending up south of the border, but it was built on trust, and trade experts say that trust is now gone.
Is achieving a greater degree of economic independence from the U.S. really possible? Can we really undo decades of integration without seeing our economy crumble?
The Star spoke with economists, academics and other experts, including SCP CEO Matthew Mendelsohn, about how the country should best navigate this new era of Trump’s isolationism, and found there are realistic steps we can take to reduce our dependence on the States.