Obviously, Canada’s relationship with the United States has deteriorated substantially since President Trump launched his tariff war and created real economic pain for Canadians. But our new study reveals more bad news, as Canada’s economy has fallen further behind the U.S. during the first quarter of the 21st century (long before Trump’s tariffs).

In fact, across every measure — including incomes, investment, employment, etc. — the U.S. clearly outperformed Canada.

But perhaps the most eye-opening statistic is the growing gap in living standards. In 1999, Canada’s GDP per-person (an indicator of living standards) was $48,076 (all figures are inflation-adjusted in Canadian dollars) compared to $58,842 in the U.S. — meaning by this measure, living standards in the U.S. were $10,766 higher than in Canada. And the economic fortunes of the two neighbours have since further diverged, considerably.

From 1999 to 2024, per-person GDP in Canada grew by 23.8 per cent to $59,529 compared to a 41.5 per cent increase (to $83,286) in the U.S. Put differently, living standards in the U.S. grew 1.7 times faster than in Canada. And the gap in living standards (again, as measured by per-person GDP) has more than doubled — from $10,766 to $23,757 over the 25-year period.

Canadian incomes are also falling behind. From 2010 (the earliest year of comparable data) to 2024, the median employment income (median means half of workers earn more, half earn less) in Canada increased by 14.7 per cent, from $32,580 to $37,361, compared to 18.9 per cent in the U.S., from $38,706 to $46,024. Put differently, in 2024 the typical Canadian worker earned $8,633 less than the typical American worker.

Business investment, which equips workers with the tools and technology they need to produce more and higher quality goods and services, has also declined significantly in Canada relative to the U.S. In 2007 (the earliest year of comparable data), businesses invested 90 cents per worker in Canada for every dollar invested per worker in the U.S. By 2024, that number dropped to 54 cents per worker in Canada for every dollar invested by American businesses.

Finally, Canada has struggled mightily to improve labour productivity, one of the main drivers of income growth. Specifically, from 1999 to 2025, productivity increased at more than twice the rate in the U.S. (67.9 per cent) compared to Canada (26.7 per cent). Declining investment and waning productivity in Canada help explain why employment incomes and living standards have increased much slower here than south of the border.

Fractious Canada-U.S. trade relations remain headline news. But what should concern Canadians as much, if not more, is that we’ve fallen further behind our American counterparts on economic results than where we were a quarter century ago. And this lack of economic progress occurred long before President Trump began his second term as president.

If we truly want to turn our economic fortunes around and help Canadians earn more money and enjoy higher living standards, Canadian policymakers should implement bold economic reforms, reduce taxes, cut red tape and streamline regulations, and remove barriers to trade among provinces. This is the recipe for widespread prosperity, and it can be implemented regardless of who occupies the White House.

Jake Fuss is director of fiscal studies and Grady Munro is a senior policy analyst at the Fraser Institute.