Since the election of U.S. president Donald Trump, tariff-fuelled economic uncertainty has dominated the news cycle. However, experts and activists point to another source of impending economic turmoil — the federal government’s contentious plan to significantly reduce immigration — that will have a disastrous impact on Canada’s economic future. 

Experts like Dan Hiebert, a professor emeritus with the University of British Columbia who researches the consequences of immigration in Canadian cities, and explains that it’s difficult to develop an immigration policy that will work for a country as large and diverse as Canada. 

Last year, the federal government announced a sweeping immigration reduction plan, which is expected to play out in uneven ways across the labor force and across the country. That will likely disproportionately impact small-to-mid-sized towns and cities experiencing labour shortages.

“We’re at a time in Canadian history where [nearly] all population growth is immigration driven. And that means that where immigrants go, grow — and where immigrants don’t go, won’t grow,” he said.

Hiebert points to situations like what is playing out in Prince Rupert in British Columbia, home to the country’s third-largest port, where several businesses, including a Safeway, have staffs that are largely made up of international students and temporary foreign workers. Some business owners reported that as high as 90 per cent of their staff are made up of temporary residents. 

“By engaging in very rapid population growth from 2022 through 2023, Canada probably expanded its economy fast enough through population growth to avoid a recession. If population growth saved us from recession, throttling back on that population growth may not do that. It may actually bring forward an economic reckoning,” said Hiebert 

“Canada’s demographic and economic future would be bleak in the absence of immigration,” adds Hiebert, pointing to Canada’s low fertility rate and productivity as indicators that Canada’s economy has come to rely on the contributions of immigrants.

In the 2025-2027 immigration plan, former Prime Minister Justin Trudeau and Immigration Minister Marc Miller aimed to reduce permanent residents by 21 per cent in 2025, and the non-permanent resident population from 7.4 per cent to five per cent of the total population, by 2027.

In May 2025, prime minister Mark Carney issued a mandate letter that briefly spoke to the previous government’s immigration plan, stating that his government would commit to restoring immigration to “sustainable levels,” while “attracting the best talent in the world to help build our economy.”

Carney’s new immigration minister Halifax MP Lena Metlage Diab has taken a quieter approach than her predecessor Marc Miller, but during question period on Wednesday, Diab reaffirmed her commitment to reducing the permanent resident target by 21 per cent. 

This plan was announced amidst contentious public debate surrounding the role that immigrant communities were playing in Canada’s several ongoing affordability crises. Voices from across Canadian institutions and civil society decried the plan as unfair and unjust, compounding the public outcry surrounding the international student cap announced earlier that year. 

Minister Miller launched the controversial international student cap to “better protect international students from bad actors and support sustainable population growth in Canada.” Miller said that the volume of international students put pressure on “housing, health care and other services.” 

Critics of the immigration cap scrutinized the veracity of the idea that international students were to largely blame for the affordable housing and healthcare crises. 

Anna Triandafylidou, Canada Excellence Research Chair in Migration and Integration, calls it a “spurious correlation.” 

Through her work as a sociologist, she sees the energy crisis, international conflicts like Russia’s invasion of Ukraine, and the instability caused by the Trump administration, all coming together to create a “perfect storm” for skyrocketing costs of living. Blaming immigration, she says, is the “easy solution.”

“We have an affordable housing crisis. Not housing, but an affordable housing crisis, which relates to very complicated and comprehensive policies. So, newcomers may be putting additional pressure on housing, but at the same time, we know many international students and many newcomers rent these basements and these bedrooms, helping people pay their mortgages,” she told Ricochet.

The immigration reduction plan cited similar motivations and reasons for the need for a reduction, despite experts and activists from across the political spectrum and varying areas of expertise finding that immigrants are not the ones to blame. 

In recent years, growing anti-immigration movements have coincided with the global rise of increasingly far-right governments, such as in the U.S., UK, and recently in Australia. 

Arthur Sweetman, professor of economics at McMaster University, specializing in health and labour economics, said “Immigrants need houses, but immigrants also work in construction. In the short term, there might be an effect, but in the long term, immigrants build as many houses as immigrants need.”  

Syed Hussain, the executive director of the Migrant Rights Network, said that the impacts caused by population degrowth could far outweigh anything else facing Canada’s economy.

“No calculation of the tariffs even approaches even just the tax revenue, much less the economic degrowth [that will come from] the changes that Trudeau made and that Carney is simply continuing,” he said. 

The exact number of individuals who will actually leave Canada as a consequence of this “immigration reset” will be significant, but still uncertain.

Media previously reported that, under current projections, roughly 1.2 million will be forced to leave Canada in 2025. However, this number comes from the projected “outflow” from the non-permanent resident population of slightly more than 1.2 million in 2025 alone. The IRCC counts “outflow” as both individuals that leave Canada through permit expiration and those who are granted permanent residency. As the IRCC also projects 395,000 new permanent residents in 2025, the actual number of migrants forced to leave through permit expiration may sit closer to 870,000. 

Since his election, Sweetman says Carney’s has been governing increasingly to the right with a strong allegiance to market forces, and that continuing with the immigration plan is just more evidence of this.

“The federal government never admits what they’re doing out loud, but one way you can interpret [this immigration policy] is that they’re returning to an older policy where immigration rates shift together with the economy,” said Sweetman.

Sweetman clarifies that this is not necessarily a bad thing, entrants into a labour market that is going through a boom, on average, fare better than those who enter during a recession.

However, Hussan says discussion among policymakers and in the media is the wrong one — it’s a conversation too fixed on the numbers.

“How many immigrants should there be? How many refugees should be? Are there too many? Do we need more workers? Do we need less workers? The obsession around numbers removes entirely the conversation around rights and treatment.”

Hussan points to the damning report released in 2023 where the UN’s Special Rapporteur on Contemporary Forms of Slavery said that he was “deeply disturbed by the accounts of exploitation and abuse shared with [him] by migrant workers” while experiencing Canada’s temporary immigration systems.

“Now it doesn’t matter if that’s five people or five million people, if they are being treated badly and are experiencing abuse and exclusion and indignities, we need to focus on improving on those conditions, but that conversation has completely been pushed aside.”