For far too long, we have trapped ourselves in a mindset of weakness and helplessness. Now, we have an opportunity to move beyond that kind of thinking and achieve our true potential as a nation.
Across the country, Canadians have been watching and waiting to see if the United States would impose the threatened 25% tariffs on our country.
So far, the Trump Administration appears to be holding off, but the U.S. President has said tariffs will be imposed on February 1st, 2025:
Notably, Donald Trump’s inaugural speech featured mention of an ‘External Revenue Service’ to collect tariff income, and Trump’s economic plan appears to be largely based on the idea of replacing taxes on American citizens with taxes on imported goods.
Of course, this is unfeasible given the fact the U.S. collected roughly $2.5 trillion in revenue from individual income taxes, $1.8 trillion from payroll taxes, and $490 billion from corporate taxes compared to $96 billion from tariffs in fiscal year 2023.
Even a blanket 25% tariff on all foreign goods would bring in just $990 billion, far short of matching domestic revenue sources for the U.S. Furthermore, the whole point of imposing tariffs is to reduce imports and incentivize domestic production, meaning that $990 billion doesn’t account for reduced imports and the economic impact of inflation, which would cause the actual tariff haul to be smaller.
Still, something being unfeasible doesn’t mean the U.S. government won’t move in the direction of trying to replace domestic taxes with tariffs.
As a result, Canadians should not assume the tariff threat is off the table. If Trump is even half-serious about replacing domestic taxes with ‘external revenue’, then he will impose tariffs.
At any moment, we could be hit by economically damaging tariffs from our largest trading partner.
And it’s not just our economic stability that is at risk.
The U.S. government is now also led by a President who is more skeptical of NATO than any since NATO was founded, and who has mused about not defending American allies.
And as if that isn’t enough, we face an escalating threat from Russia & China, both of whom have designs on the Arctic and both of whom are rapidly building up their military strength.
As I noted in a recent short comment for The Hub, Canada bet on a world that no longer exists, and now we must adapt.
Canada could be far more powerful than we think
As we face this perilous moment, we need to think about things in a new way.
With that in mind, I want you to take a moment and imagine if Israel had a population of 40 million people and possessed a territory equal in size and resource-abundance to Canada.
Why Israel?
Because of what Israel has been able to achieve despite their tiny amount of land and despite being almost devoid of resources while being surrounded by much larger hostile states.
With a tiny landmass and a population of just about 10 million people, Israel has an independent space program, a powerful air force, advanced ground forces, robust air defence, and a world-class spy service.
Israel has repeatedly won wars against much larger foes, has managed to construct an impressive domestic arms industry, is a military innovator (the Trophy Active Protection System developed by Rafael Advanced Defence Systems as one example), and has shown the world that a free and democratic nation can also be highly militarized while preserving democracy.
If Israel had the population, territory, and resource riches of Canada, it would be a world superpower.
It follows then that Canada could be a superpower as well.
Of course, we aren’t used to thinking of ourselves in this way.
We think of ourselves as a ‘middle power’ or a ‘convening’ power.
But this is a choice, rather than an unchangeable reality.
Consider this:
Lithuania is planning to raise their military spending to 5-6% from 2026-2030
As a country bordering Belarus (which means they may as well be bordering Russia given that Belarus is a Russian vassal), Lithuania knows that they could be attacked by Putin’s regime with little warning, and that such a conflict could lead to a massive war. Thus, Lithuania is doing what a serious country does – investing in its national defence.
Lithuania has a relatively small population – 2.9 million – and a per capita GDP of about half of Canada’s.
This means that if Canada were to make an equivalent commitment to national defence, the results would be staggering:
If Canada were to spend 5% of GDP on our military, we would be putting roughly $150 billion towards our national defence, and we would be the fourth or fifth biggest military spender on Earth.
We have a lower debt-to-GDP ratio than many of our allied countries that are hitting and exceeding the NATO target.
Remember this when someone says we ‘can’t afford’ to rebuild our military.
We absolutely can afford it.
The only thing stopping us is a lack of will.
Remember, Canada’s GDP is about equivalent to that of Russia. Before Russia invaded Ukraine, Russia was considered to be the second or third strongest military power on Earth.
This means that were Canada to put a real effort into rebuilding our Armed Forces, we should be able to hold our own in a conventional fight with Russia – even without any assistance. (Obviously, any Canadian fight against Russia would be done with our allies by our side in defence of a country Russia invaded, but it’s useful to consider that we could be strong enough to do it on our own).
This may sound absurd to some, given how we are so used to discounting our potential strength as Canadians. But given that Ukraine – with a smaller population, less resource wealth, and less territory – has been able to hold Russia back without foreign intervention, there’s no logical reason why Canada couldn’t be powerful enough to do the same.
Imagine how much different the world would be if Canada was a top-five military power.
Imagine the jobs it would create for our citizens.
Imagine the industries it would help build here at home.
Imagine the benefits from the investment in Research & Development.
Imagine the surge in national pride.
Imagine the sense of security we would gain by being able to defend our territory.
Imagine the boost in respect from our American and European allies.
Imagine the shift in the balance of power as authoritarian states like Russia and China would have to deal with two free and democratic military powers from North America, combined hopefully with a more robust European military.
This is all entirely possible.
Canada has one of the world’s largest economies.
We are a technologically advanced country.
Despite our recent economic struggles – we have a high per capita GDP.
We have a relatively low debt-to-GDP ratio.
Even at a low point caused by poor governance and a failure to fully develop our energy sector, just a few years of decent governance should put us back in a decent position.
A key point is that despite Canada’s current moment of decline, we still have the potential to be one of the richest and most powerful countries in the world.
If we were to unleash the power of our resources, build pipelines across the nation to reduce our dependence on the United States, diversify our trade partners, and eliminate all interprovincial trade barriers, and if we were to take our national defence seriously – as nations like Lithuania, Poland, Latvia, Estonia, and others are doing – we could be one of the most powerful countries on Earth.
An ambitious agenda
The years ahead could be quite difficult for our country, but this could also be a moment of tremendous opportunity.
For all our current challenges, we are blessed to be Canadian, and blessed to be the inheritors of a vast, beautiful, and resource-rich land.
Now is the time for us to escape from our limiting mindset of helplessness and weakness. We are not fated to be a vulnerable country. We are not destined to have our future decided by others. We have what it takes – in terms of people, in terms of values, in terms of wealth, in terms of resources, and in terms of land – to be one of the world’s most powerful nations on the planet.
It’s time for us to embrace the possibilities of the future, act like a serious country, and embrace Canada’s full potential.
Spencer Fernando
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