In the last month, President Donald Trump has managed to rile the traditionally still waters of U.S.-Canada relations. From his offer to make Canada the “fifty-first state” to imposing a 25 percent tariff on Canadian goods and a 10 percent tariff on Canadian energy exports to the United States, Trump’s controversial moves have alienated some, inspired others, and stunned nearly everyone.
Still, once the dust settles from the current controversies, the Trump démarche signals it’s time for a fruitful debate on where Washington-Ottawa relations need to go in the future, as well as where they are in the present.
More than one commentator (including media personality and former Canadian citizen Kevin O’Leary) has raised the specter of a U.S.-Canadian economic union, even a North American monetary union, with Canadians retaining their national sovereignty while enjoying the benefits of integration into the much larger, and substantially more tax-free, U.S. economy.
The truth is, we are on the brink of what futurist Herman Kahn would term a U.S.-Canada “superstate,” that will dominate the fate of the Western Hemisphere as well as global markets.
Hudson Institute founder Herman Kahn coined the term “superstate” to describe a country that has the resources to become “an economic, technological, and financial giant,” but chooses not to use that status to gain power and influence over other nations, i.e., to act as a “superpower.” Since the United States already holds that superpower status, the role of Canada (and perhaps eventually Mexico) would be to expand the benefits of superstate status to enhance the security, lives, and fortunes of its own citizens, as well as those of American citizens.
While Canada’s GDP remains a fraction of that of the United States, the planned coordination of U.S.-Canadian resources across a broad range of sectors, from energy to AI, could yield not only economic benefits to the citizens of both countries, but major strategic advantages, especially regarding the superpower we all face on our Pacific shores, namely China.
Here are four areas where a U.S.-Canadian consortium or “superstate” can have a powerful impact.
The most obvious is energy. Today, Canada is the fourth-largest producer of oil (5.76 million barrels per day in 2023) and the fourth-largest in natural gas (18.1 billion cubic feet per day in 2023). Taken together, the United States and Canada produce about 30 percent of the world’s natural gas and 25 percent of the world’s oil. A North American energy bloc, including LNG exports and cross-border pipelines like the still-suspended XL Pipeline, would dominate global markets as never before, while also reshaping the overall geopolitical landscape of energy production.
The second area is the extraction of strategic minerals. While the proposed mineral deal with Ukraine will take years—even decades—to yield results, Canada is already a major producer of gold, iron, nickel, and copper. It also sponsors important projects involving its rich reserves in rare earth elements such as lithium, cobalt, graphite, and vanadium.
The global demand for lithium is expected to more than quadruple from 720,000 metric tons in 2022 to an estimated 3.1 million metric tons in 2030. The IEA projects that demand for cobalt will climb from 215,000 metric tons in 2023 to 454,000 metric tons by 2040. Meanwhile, the demand for nickel is slated to triple by 2030, thanks to the demand for electric vehicles—including in China.
While China has sought to dominate supply chains in all these critical minerals, a proactive U.S.-Canada consortium could displace China as a major supplier to world markets. Indeed, Canadian companies could help to revive the United States’ own mining industry, which ceded global leadership to countries like China, Canada, and Australia thanks to outsourcing and over-regulation (the United States even closed its Bureau of Mines in 1996). Working together, the American and Canadian mining sectors can set clean and environmentally safe standards for the extraction of all these materials.
The third area is AI and quantum technology. While we rightly think of the United States as the global leader in AI and machine learning, according to Deloitte’s 2023 AI report, Canada ranks third among G7 countries in total funding per capita for generative AI companies, and first in AI publications per capita. At the same time, Canada has emerged as one of the leading centers for the research and development of quantum technologies, including quantum computing. The University of Calgary in Alberta, the Institute for Quantum Computing at the University of Waterloo, and Sherbrooke University in Quebec are among the world leaders in quantum technology.
Together with America’s already established leadership in AI, especially in generative AI and quantum computing, both countries could be on the verge of launching a new era of advanced information technologies—truly a digital Golden Age.
The fourth and final area is coordination on national and hemispheric defense. In addition to border security, coordinating American and Canadian defense spending, including on advanced technologies, should be a major topic of discussion between Ottawa and Washington in the second Trump administration. For example, working together to secure the Arctic region will become a security priority, as the region becomes a focus of great power competition with Russia and China. Coordinating strategic operations in and around Greenland and coordinating space power effects shared between the U.S. Space Force and the Canadian Air Force should also be a significant priority.
Despite the current challenges facing Washington-Ottawa relations, the emergence of a U.S.-Canada “superstate” ought to come as no surprise. As I noted in my book How The Scots Invented the Modern World, “Canada and the United States should be more alike than they are.” Both countries are nations of immigrants sharing a common language and common geography, despite differences in their respective constitutions and political systems—differences that may be too intractable to overcome.
Still, the possibility of bringing together the productive forces and resources of both nations to enrich the lives of their respective citizens and dominate the global scene for decades to come will be too important to ignore—perhaps even too inevitable to evade.