Canada as a 51st US State…. The Refrain.

Canada must become an integrated part of an economically self-sufficient and secure North American Super-Nation.

In May 2025 I wrote the attached article where I outlined the options for the next phase of the trade activities in the North American Continent… USA, Canada and Mexico.

I explained how the USMCA is soon going to be up for review, and it does not look good for it to be ratified in its current form.

The Looming Problem

It’s clear that Canada and to a lesser extent Mexico look to be the net losers if the USA decides to adopt a more closed border trade policy where tariffs are imposed to encourage strict USA content on what is consumed within the USA.

This would dissolve the current USMCA trade deal.

For some it may be a revelation, but global free trade is not a god given right for one nation to expect from another. Each nation has the right to decide how and who it trades with for the benefit of its citizens. This some-what forgotten concept has come back into sharp focus because the grand experiment of global free trade has failed to satisfy the majority of US voters, who now firmly believe such global trade is not in their economic best interests, and certainly this is the firm direction of the current US administration.

So, the only difference between Canada and Mexico and the rest of the world trade partners in relation to this recent USA trade ideology is that they share borders with the USA.

So now that the current US administration has pushed the trade reset button let’s explain the possible options for Canada and Mexico.

Both Canada and Mexico have enjoyed until now a charmed “double life” of advantageous free trade with the USA with the option to also access global free trade markets.

Although local content rules are supposed to be managed by the USMCA agreement this “double life” scenario has allowed a “pass-through” effect of products and certainly materials entering the USMCA free trade zone from players outside of that zone without local value adding content, and this practice has mostly disadvantaged the USMCA participants.

So, in many ways the USMCA has not operated as a true trade bloc with the trade security of strict and enforced local content, but has allowed the rest of the world a cheap back door ticket to the North American market.

As I explained in the attached article, no amount of “elbows up” counter tariffing by Canada and Mexico is going to make much difference as a counter tariff just makes the trade pain even worse for those wanting to trade.

The thing to know is that a trade border tariff can be self funding if these conditions are met.

1. The purpose of the tariff is to restrict border trade.

2. The landed cost differential between the two trade zones are reasonably competitive.

3. The local economy can easily absorb the extra demand.

If these conditions are met, then the tariffs will aid reshoring of external national trade that increases local content, and also generates revenue that can be deployed to assist in that reshoring transformation…. So as said… it can be self funding.

Mexico still has a somewhat competitive labor rate advantage, but this is diminishing. Also, they do have significant US invested capital in terms of manufacturing facilities that may have to be duplicated in the USA.

Also, Mexico enjoys a growth economy that makes it equitable for US businesses to retain capacity on the Mexico side of the border to service that growth.

So, the US trade strategy with Mexico will be more about enforcing a stronger trade bloc approach to ensure more local content stays between the US and Mexico, and as explained above, better eliminate “pass- through” trade.

Canada has no cost advantage compared to the US, and although some exceptions exist most business face lower productivity and higher operating costs if they remain in Canada. So, the tariffs are a clear signal to businesses to move operations and investments south of the border to join a market that is ten times the size.

Canada’s only intrinsic advantage is its abundance of natural resources and raw materials that can be farmed, mined and extracted.

Canada has enjoyed a modern and competitive workforce, but in many sectors, this has not been sustained and is diminishing as the existing skillset retires. Plus, new hi-skill-set workers are mobile and will mostly relocate for a better career.

Although some need for recapitalization may restrict rapid relocation most of the existing industries could be relocated into the existing US operations and such consolidation will probably produce operating savings, and will certainly reduce the cost of cross border supply chain waste.

Its also clear based on these economic dynamics that irrespective of how much Canadian government funds are used to encourage local new technology startups they will eventually seek a closer alignment with the US economy.

Canada may be able to offset some of the value of the trade lost by US tariffs by trading offshore with both the EU and Asia, but this strategy has already been exercised and holds many drawbacks, including the increasing cost and logistical disadvantage of long supply chains.

Other than raw resource and energy products that can leverage global demand its very doubtful this long-shoring trade strategy can yield a sustainable economic environment that will replace the lost value-added trade enjoyed with the USA.

The Solution for Canada

As I explained in my article the best course of action is to strongly avoid a trade divorce with the USA and entertain a far closer relationship.

It’s now clear that the world is not ready for a new world order or being dependent on the concept of the global village, or any other form of multilateralism, internationalism, cosmopolitanism or globalism.

For these reasons sensible nations will organize into autonomous localized trade blocs and reshore products and services to gain back as much value adding content and achieve resource and energy independence as much as possible.

It’s also clear that the USA is now always going to be aligned with a nation-centric agenda whatever the political stripes in power.

Canadians are still hoping the Canadian leadership can negotiate a new USMCA style free trade bloc agreement but its doubtful this will happen and provide a sustainable economic environment.

But it’s clear that Trump and his administration may entertain Canada becoming a much more integrated part of an economically self-sufficient and secure North American Super-Nation that will operate as a true localized trade bloc that can generate strong prosperity for the mutual benefit of all its citizens.

This means that Canada will need a leadership that can find a way to make a deal around this Super-Nation concept, and quickly transition away from the now dead global order that worshipped the multilateral global free-market system that was followed since the end of the Second World War.

Also, any political leader that has become tainted with the past UN multilateral initiatives and the WEF / Davos anti-natural resources agenda, and the failed and unrealistic climate change NetZero goals, will struggle to accept and affiliate with the latest U.S. policies.

So its time for us Canadians to stop pandering to the virtue signaling hollow ring of national sovereignty and get far more practical and far less emotional and come to realize that it is worthwhile and also very interesting to approach Trump and call him out on his offer to make us a 51^st state, and see where that deal of a North American Super-Nation could go, and how it could be structured, rather than continue to act like pompous spoiled neighbors that are not prepared to consider all the options that may be good for us all into the future.

Here is my original article…

Trump is correct ..… Canada should become the 51st State.

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Nigel Southway is an independent business consultant and the author of Cycle Time Management: The Fast Track to Time-Based Productivity Improvement, a LEAN thinking textbook.

He consults and educates worldwide on Business Productivity Improvement, Advanced Manufacturing Engineering, and Global Sustainability.

He is a past chair of the Society of Manufacturing Engineers and the leading advocate for the Take Back Manufacturing Forum, and the North American Reshoring initiative in Canada.

His latest book Take Back Manufacturing addresses the content contained in this article.

www.nigelsouthway.org