Will the US and Canada Actually Merge?

Photo of US and Canada Flag

Listen, I didn’t want to make this video, but too many people asked for it…so here we go. What would a potential merger of the US and Canada look like?

The US won’t be invading Canada and there won’t be a nationwide Canadian petition for US membership, but how would it happen? It’s more likely that individual Canadian provinces – like Alberta and Saskatchewan- would secede and apply for US statehood.

These two provinces are young and wealthy, meaning they’re going to have to put the rest of Canada on their backs (financially speaking). They already have strong economic ties to the US, so a merger isn’t as far-fetched for them. The rest of Canada would likely destabilize if those provinces left, due to aging demographics and financial struggles.

For the US, incorporating Canadian provinces would mean a significant reshaping of American politics. However, that doesn’t mean it would be all that difficult to add them in; it’s a much easier process adding states than amending the constitution.

Regardless, I don’t see this happening anytime soon. There’s too many financial, political, and demographic factors at play. But if it did happen, both countries’ political and economic landscapes would dramatically shift.

Prefer to read the transcript? Click here

Here at Zeihan on Geopolitics, our chosen charity partner is MedShare. They provide emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it, so we can be sure that every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence.

For those who would like to donate directly to MedShare or to learn more about their efforts, you can click this link.

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Transcript

All right. I didn’t want to do this video, but too many people on both sides of the border have asked so what would a merger of the United States and Canada look like? All right. Let’s start with the simple thing. The United States is not going to invade Canada. There is no serious talk about Trump. He hasn’t even really joked about it. 

So let’s just put that to the side. Canada has just shy of 40 million people. So if it was to join in a single piece, it would be right up with California as our first or second most populous States. But it has a demographic picture that’s kind of a mix. And so what would be far more likely to happen? 

Because the idea that a majority of Canadians are going to petition for U.S. membership is a stretch. We’ll be far more likely to happen. Is individual provinces of Canada would secede from the Canadian nation, and then apply for statehood for the United States. 

The first two states to watch are the two that are youngest demographically, that are the richest in per capita terms, that export the most commodities per capita, and are already fairly culturally linked in with the United States. 

And those are Alberta and Saskatchewan. And if you’re looking at a map of Canada, keep in mind that everyone lives in a thin strip along the southern border. So you’ve got British Columbia on the Pacific. You’ve got some mountains, big mountains, and then Alberta and Saskatchewan, Manitoba, the third of the prairie provinces. And then you crossed something called the Canadian Shield, which is about 1000km of very rugged terrain, heavily forested, where there’s only one road and one rail line. 

Before you get to eastern Canada and in eastern Canada, you’ve got the population bloc of Ontario and Quebec, which are the bulk of the country’s population. And then fringed around them are something they call the maritime territories, which are provinces, but lightly populated. And, basically, I’m overstating this, so apologies. Heavily populated by retirees. So from from a financial point of view, there’s not a lot there. 

Where the money is, is Ontario and Quebec, the two most populous provinces? British Columbia, which has a big population around Vancouver and serves as the Pacific Gateway and then Alberta, which is the energy hub. Saskatchewan is kind of a little bit of the energy hub. And then a lot of agriculture, just like Alberta. What would happen is Alberta and Saskatchewan or Alberta or Saskatchewan would leave, the Canadian nation, which is legal in Canada. 

You just have to have a plebiscite that was affirmed by A90 ruling by the Canadian Supreme Court quite some time ago. With regard to tobacco separatism. Anyway, the reason that these two provinces, Saskatchewan and Alberta, would leave is largely financial. When Quebec was having all of its fits in the 70s and 80s and early 90s about secession. 

The the what? The deal that was struck was that Ontario, which at the time was the richest and the most populous province, would basically pay Quebec to just stop it. So, Quebec has basically been paid for the last few decades to remain part of Canada and not have secession votes. It’s gotten more and more expensive because Quebec’s birthrate, is among the lowest of the major. 

It is the lowest of the major provinces. And so the whole province has already functionally slid into obsolescence. The problem is, in Ontario. The birth rate has been very low for a long time. And if it wasn’t for the huge surges of immigration, which have had other complications. 

Ontario has now aged to the point that if it wasn’t for huge surges in immigration which generate their own problems, Ontario wouldn’t be able to pay to keep, Quebec in the country anyway, but it is still aging very rapidly. 

And of late, Canadians have pushed back against this open door immigration policy, which hasn’t been necessary for economic reasons. But now, culturally, it’s kind of hit a breaking point and everything has slowed significantly, which means that Ontario is now rapidly aging again. And within five years, Alberta will be the province that is expected to pay for, Quebec to remain in the country with a little bit of help from Saskatchewan. 

The maritime provinces have already aged out, and if the two most populous provinces age out, there is no way that Saskatchewan and Alberta, which collectively have less than 7 million people, can pay for the rest of Canada to continue to exist unless they just become destitute. That’s the financial argument for why you might see secession in the prairie provinces. 

And that’s before you consider that every individual Canadian province, trades more with the United States, and it does with the rest of Canada. And that is true for none of them more than it is for Alberta. So you’d actually solve a fair number of problems if Alberta applied and Saskatchewan applied for American, statehood. Now, the question then is what happens next? 

Because these are the two richest bits of the country. And if you split British Columbia off from the rest of the country, because now the prairies have gone a different way, it basically devolves into fourth world status very quickly. It’s industry is already wildly noncompetitive, and basically what has kept B.C. afloat for the last several years is capital flight coming in, most notably from China to be processed in BC and then spread throughout the Canadian economy? 

That would stop if there was no land connection. The only other business that you really have in BC is it serves as the entrepot for Asian exports coming into Canada. If you use the super port in Vancouver, repackage everything on the rail and send it east. If you can’t get through Alberta and Saskatchewan. That’s not going to work either. 

So BC looks really awful in that circumstances, and the rest of Canada out east doesn’t look great too, because basically it’s a retired country that looks worse than most European demographics. So. If all of these other provinces, either in combination or independently, were to ask for statehood in the United States, we’d have to do some really hard math as to whether it would be worth it. 

Picking up a half a dozen states that economically are almost destitute. Basically, you’d be adding a half a dozen mississippis. I’m not sure we would be willing to do that. And that’s before you consider the politics of it. By the way, the United States does political math. Saskatchewan and Alberta would probably be considered 1990s style Texas Republicans a little bit more libertarian, socially moderate, economically conservative. 

They wouldn’t get along with today’s MAGA all that well. But the rest of Canada, especially BC and Ontario and Quebec, would be of the Elizabeth Warren branch of the Democratic Party. And getting that through Congress might be kind of interesting. Now, that said, adding states is not as complicated as amending the Constitution. You want to amend the Constitution, you need two thirds vote from both houses of Congress. 

And then in three quarters of the states, legislators legislatures have to ratify it. You want to add a state, you just need a simple majority. So you just need a simple majority of Congress. You don’t ask the states at all. And then the president signs off just like a normal bill. So if if if if if if we get to that point, Canada will very quickly become a political flashpoint regardless of what politics looks like in the United States, because you’re talking about potentially adding ten provinces or ten states to the United States, a system that’s 20 senators and about the same number of representatives as California has, which I believe is around 50 right now. So a significant shift in the balance of power, that would completely re fabricate how we have our politics. Now, if that happened in a year, wow. That would be all kinds of explosive, because the United States is in the midst of a pretty deep political reorientation, by itself. But at any time that, you have that sort of disruption, you’re going to change the political math by how the country works. 

And then and then you get to talk about how things like Medicare, Social Security, and Medicaid, which are the three of the four biggest line items in the U.S. budget, get re fabricated when you add so many people who are already retired. It would be a hoot. Don’t think it’s going to happen anytime soon, but if it was going to happen, that’s how it would go down.

Are Rare Earths Really That Rare?

A close up photo of colbat rocks

Rare earths are back in the headlines, but is all the hype worth it? Let’s breakdown what these are and how “rare” they actually are.

Rare earths are byproducts of mining for other metals like nickel, copper, and uranium. While not rare on Earth, they are rarely found in sufficient abundance in a single location for their mining to be economically viable. The only real challenging aspect lies in the refining process, which is just dirty, time-consuming, and expensive…but not all that difficult to do.

China dominates rare earths because they have subsidized production (artificially lowering the price) and they’ve been doing it for decades. So, other countries haven’t had any incentive to turn on their refining capacity, yet. Once the Chinese overplay their hand or the system crumbles, other nations will just ramp up production.

This isn’t really something to fear, other than a few months of issues. However, the US should be more concerned with other critical supply chains like aluminum, steel, and lithium, where the US has yet to build out sufficient infrastructure.

Prefer to read the transcript? Click here

Here at Zeihan on Geopolitics, our chosen charity partner is MedShare. They provide emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it, so we can be sure that every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence.

For those who would like to donate directly to MedShare or to learn more about their efforts, you can click this link.

Learn about medshare here

Transcript

Hey, all, Peter Zeihan, coming to you from a very, very chilly Colorado. Today we’re taking a question from the Patreon page that’s been popping up a lot in the news about rare earths. There’s a lot of angles to this, but basically, it seems that the Trump administration is really interested in getting some production of the stuff. And the question is, how does it work? 

What do we need? Where do we go? You may recall recently Trump, falling to Russian propaganda again said that, Ukraine owes the United States $500 billion and it should pay for it with rare earths and not get a security guarantee in exchange. By the way, total USA to Ukraine at this point, according to US government sources, is less than $100 billion, of which two thirds is weapons that were just sitting in warehouses that we were going to blow off anyway. 

Anyway, rare earths, unlike the name rare earths are not rare. They are produced as a byproduct of mining. When you’re doing nickel or copper or platinum? Uranium? Palladium. That’s a platinum group. Coal ash, phosphates, sometimes lead. 

I said iron ore already. Aluminum. Bauxite. Anyway, there’s like 20 different, macro metals that you mined for, plus coal ash, that produce Rees as a small soda product. 

And so what usually happens is you produce the primary thing that you’re after. And then with the waste from your refining process, you maybe do another run of that in order to concentrate the earths a little bit more. But then that next stage of taking that kind of slag that’s been partially refined and turn it into useful rare earth metals, is very dirty. 

It’s very polluted, and it takes a lot of time. So usually what happens is you take that slag and you to ship it off to China. Because back in the 1980s and 90s, the Chinese were looking for industries that they could corner and their technology was not very good. And they settled on rare earths because it was expensive and it was dirty. 

But they have a very capital flush system where they basically print currency and confiscate everybody’s bank deposits to pay for whatever development plan they want. So what they do is they you build a couple hundred vats of acid and you dissolve everything in the first bout, and then you get the remnants. You put that in a second batch, and then the remnants from that third, that remnants of the fourth that intruded. 

And over the course of months, starting with tons of slag material, you might end up with an ounce of a rare earth metal. Anyway, the Chinese cornered this market because it was something that no one else was like, oh, I want to do that. And so they ended up super saturating the market because Chinese economics are about throughput rather than efficiency. 

And they continue to subsidize the industry today, which is why, based on the Earth, somewhere between 50% and 95% of it comes out of China, the refined metal. And then, of course, in the last 10 or 15 years, they tried to go, downstream, into processing and building product out of those things. Be even less successful in that. 

Anyway, this technology is based on the 1920s. So there’s nothing that’s difficult about this, and it doesn’t really take a lot of time to set up. It’s just that once you actually start putting your slag into the acid, it’s going to be months before you get any material. So the problem is not rare earths per se. The problem isn’t even production. 

Rare earths are a byproduct of any number of industrial, mining and purification processes. The problem is building out that processing capacity. Now, how long does that take? I would argue that in Australia, Malaysia, France and the United States, most of that work has already been done. But nobody wants to turn it on because you’ve got several months where you’re not getting any product. 

And the Chinese continue to super saturate the market and provide the world with below cost rare earths. So at some point, a switch is going to be flipped, and everyone’s mind when they realize either that the Chinese are overplaying their hand with their control of the processing capacity or trying to just brakes. And everyone realizes that if they still want the stuff, they’re going to have to make it themselves. 

Once that happens, all of this spare refining capacity around the world will spring up. And the problem we solved in six months to a year. Until then, we are in the unfortunate position that the US government seems to be beholden to Chinese and Russian propaganda on the rareness of rare earths, and that, unfortunately, is shaping policy in a number of places. 

It’s like if you want to be paranoid about things that the Chinese dominate. This isn’t where you go. You should be concerned of other types of processing, such as turning bauxite into aluminum, turning iron ore into steel, turning lithium concentrate into lithium metal because those are places we’re setting up the, replacement infrastructure. The United hasn’t really started at scale yet. 

And if the Chinese break before that’s done, we will then have to build out that infrastructure in an environment when we can’t get the intermediate product. And that will generate the mother of all inflation pulses. So, you know, one miracle at a time, I’d argue that this specific problem, rare earths, is not all that much of a problem. 

There’s plenty of streams coming from plenty of places. We just have to turn on a few things to solve it.

What Trump Should Take on Instead…

Newspaper photo of President Donald Trump

The last few videos have covered all the things that Trump is focusing on (and doing wrong), and many of you have asked where he SHOULD be spending his time. So, today we’re discussing the things that should be prioritized.

The US has a unique global position, its economy is strong, it has a powerful military, and it’s largely self-sufficient when it comes to energy and food. With that in mind, here are the four main opportunities I see: Europe, the UK, Southeast Asia, and Cuba.

Each of these places offers the US something it could use in the decades coming. Whether that’s a foothold in reshaping European economics and diplomacy, adding the UK into NAFTA to strengthen economic ties, securing a future of industrial capacity in Southeast Asia, or adding a low cost manufacturing partner in Cuba.

Basically, I would stop spending my time antagonizing our allies and focus on strengthening our economic and strategic partnerships.

Prefer to read the transcript? Click here

Here at Zeihan on Geopolitics, our chosen charity partner is MedShare. They provide emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it, so we can be sure that every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence.

For those who would like to donate directly to MedShare or to learn more about their efforts, you can click this link.

Learn about medshare here

Transcript

Hey, all. Peter Zeihan here coming to you from Colorado. We’ve been doing a number of pieces on how Donald Trump is, manipulating the world for various outcomes. A lot of you have written in and asked me, well, what should he be working on? And I’m going to assume that you’re asking that in a constructive way. 

So here we go. Remember that we are in this weird moment in history where the United States is really the only country of size that has a positive demographic structure and so still has a consumption led economy. We’ve got military reach, around the world. We have navy that’s more powerful than the next eight put together, if not all of them self-sufficient, energy, self-sufficient in food. 

We’re really holding the handle of the whip on everything that matters. The question is how we want to use it. And if you look around the world, the opportunities are just robust. Right now in the Middle East, Iran has suffered a generational blowback. It’s lost its allies and Hezbollah and, Syria and the time is here to completely remake the region, really, however we would want. 

We’ve got something similar going on in China as it’s facing demographic, financial, transportation and strategic collapse. Ten years from now, China won’t exist. And by the end of this century, the Han of necessity won’t exist. Talk about just a wondrous opportunity to shape things in a different way. Donald Trump instead is, picking fights with all of the allies, specifically the allies that we’re going to need to help re fabricate the future, especially our own in terms of manufacturing. 

So I look for the low hanging fruit that is out there right now, of which there is an immense volume. Let’s start with Europe. Germany is in the midst of an election campaign. No matter who wins, it’s going to be a weak government with three parties. It’s going to be very difficult for to lead at home and impossible for it to lead on the European stage. 

In France we have a hung parliament, and if we have elections again this year, that locks the French out of policymaking for at least six months, assuming they come up with a new government that’s actually cohesive, which is very unlikely. I mean, the France is kind of out to lunch.  

Italy has a reasonably strong leader in the form of Giorgia meloni. But she too leads a coalition government, and she can only go so far. And then the Brits are gone because of Brexit. So there is no leadership in Europe. If you wanted to take control of the continent from an economic and a diplomatic point of view and reshape how it works for generations, now is the time. And instead we had JD Vance at the Munich Security Conference talking to the Europeans about how European cultural evolutions are a greater threat to the United States than either Russian nuclear weapons or Chinese predatory practices and cyber, attacks. 

It was easily the most destructive speech that I could have come up with in terms of solidifying the alliance against the Russians, against the Chinese, to create a new world. And I’ve never seen so much diplomatic and political power by any country pissed away in 45 minutes. But that’s where we are. I don’t know if it’s too late to kind of pick up the pieces, but clearly keep Vance away from all of them. 

That opportunity, unfortunately, may have been destroyed in a single hour. Second up, the Brits, the Brits voted themselves out of the European Union several years ago. And if you’re like me and you see the demographic changes coming that the European Union is going to have to re fabricate itself from its current state as an export union to something else, because if you don’t have enough workers, you don’t have enough taxpayers. 

All of the economic models that we have right now just don’t make sense. So getting out of that before the break and starting on something new, that made a lot of sense to me, puts the Brits never got started on anything new. They’ve just kind of been in this netherworld in the seven years since, and we now have a newish government in London that is giving fresh insipidus to the term disorganized destruction. 

They can’t seem to form a policy on anything. They’re completely rudderless. Well, as the world did, China fires, we’re going to need some partners to build an industrial plant that can replace what the Chinese are going to take away with them as they fall. The United Kingdom is a first world country with a highly technocratic system and phenomenal engineers. 

I would love to see NAFTA expand to take in the United Kingdom. And since the Brits can’t make any decisions right now, having somebody of Trump’s, how should I say, this delicate nature impose a solution on them would be brilliant. And instead, the administration has basically just ignored the United Kingdom altogether. Third is Southeast Asia. This is home to about a billion people. 

We already count Vietnam as one of our top ten trading partners, a position it’s just gained in the last few years. And it is the part of the world that is most likely to pick up pieces of the industrial plant that the Chinese can no longer operate. Also, most of the countries in Southeast Asia already have lower operating costs. 

It’s a geographic feature. Most of Southeast Asia is jungle and islands and, peninsula and mountain. So it’s really hard for them to integrate in the traditional sense. And people flock to the cities because they don’t want to work in tropical agriculture. What that means is most of the, states interact by water for their trade. They have limited physical connection. 

So they don’t have any of the bad blood, like what has existed historically in Europe or Northeast Asia. It’s very easy for them to make economic deals with one another. And they have also because people are crowded in the cities, there are workforce is cheaper on average than the skill points that there are compared to the global average. 

So they’re very, very competitive in any number of things. And as China falls, this is the region that’s going to do the best. And so a tighter relationship between North America and Southeast Asia is really the smartest play that we could take in terms of our trade and our future security and economic relations. And Trump on China has done almost nothing so far. 

And on Southeast Asia it’s been crickets. But with the Americans basically ignoring East Asia, the Chinese are doing everything they can to double down and triple down in Southeast Asia to hedge out the United States. So the opportunity is still there. We should seize it with both hands. And then fourth, and finally is something much closer to home. 

And that’s Cuba. We’re in this weird little situation right now where Mexico has become so high value added that it needs a low cost manufacturing partner. And I would argue that the workforce in Cuba is roughly half the skills of the Mexicans for about one tenth of the cost. So if Cuba were to be opened up and were to join the North American trading family in some way, it would be a huge addition. 

Now, obviously there are some political problems between here and there. The United States and Cuba have not gotten along ever since Castro’s rise in the early 60s. But I would argue that while I think Trump’s bare knuckle approach negotiations with the allies is perhaps not the best way to go, unleashing that kind of fire and fury on Cuba, I think would be highly entertaining. 

And it could actually lead to some political shifts in Havana that we would like a great deal. It’s not just about the economic side of things there. Getting Cuba back into the American family of nations is something that would hugely boost our security and basically make it impossible for anyone from the Eastern hemisphere to punch into the Western Hemisphere, or at least are part of it. 

So those are kind of my big four. I quit picking fights with the allies, especially the ones, you know, you’re going to need for economic issues and start picking fights with the countries that, are actually trying to hobble you, maybe. And in the meantime, solidify relations with the countries that are on the fringes who could really be part of a very bright future.