Canada’s U.S. investment exposure raises alarms: Argitis
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Two recent developments are sparking renewed concern over Canada’s heavy financial reliance on the U.S., prompting questions about the risks to national wealth and retirement security, Theo Argitis writes in The Hub.
The Canada Pension Plan Investment Board (CPPIB) revealed last week that 47% of its assets are now invested in the U.S., up from 42% in 2023 and 37% in 2019. The CPPIB’s growing exposure underscores how deeply Canada’s retirement system depends on the stability of the American economy. “It’s a striking reminder of how much of our long-term retirement security hinges on the stability and openness of the U.S. economy,” Argitis says.
Compounding that vulnerability, former U.S. president Donald Trump’s latest budget proposal includes provisions that could allow Washington to override existing tax treaty obligations with Canada. This could open the door to new taxes on Canadian investment returns, including pension funds. “The United States could emerge as a systemic risk to our national wealth,” he warns.
With Canadian investors holding $6.3 trillion in U.S. assets — $1.8 trillion of which is net investment — the debate is growing over whether Canada should rethink its wealth strategy. “If our trade dependence on the U.S. is, as Prime Minister Mark Carney has put it, an existential issue in need of a major fix, should we also be rethinking how much of our wealth is invested in one country — especially one whose politics are becoming more erratic and transactional?”
