Canada has announced plans to cut immigration levels to address mounting pressures on housing and social services. While the government aims to ease these strains, industry groups have expressed concerns about the potential impact on the labor force.

Historically known for its welcoming stance towards immigrants, public sentiment in Canada has shifted, with many blaming high immigration for decreasing housing affordability. The new plan will see the country accept 395,000 new permanent residents in 2025, followed by 380,000 in 2026 and 365,000 in 2027. This marks a significant reduction from the 485,000 planned for 2024, representing the first multi-year decrease in immigration levels since 2018.

Prime Minister Justin Trudeau confirmed the cuts, acknowledging that his government may have overcorrected in its attempts to meet post-pandemic labor needs. “We didn’t get the balance quite right,” he said, highlighting the challenges of managing both population growth and labor shortages.

The cuts are expected to also reduce the number of temporary residents by hundreds of thousands each year. The government hopes that many of the more than 1 million individuals whose visas are due to expire will leave voluntarily. This move has left many small business owners unsettled. The Canadian Federation of Independent Business reported receiving distressed calls from owners who are heartbroken about saying goodbye to foreign workers whose visas are ending.

Diana Palmerin-Velasco, senior director of the Future of Work at Canada's Chamber of Commerce, voiced concerns over the potential repercussions of these changes. “I think we were able to officially avoid a recession because of immigration,” she said, emphasizing the need for foreign investment and workers to drive economic growth.

Polls indicate that a growing number of Canadians believe the country is admitting too many immigrants, prompting the federal Liberal government, which is lagging in election polls ahead of the October 2025 elections, to reconsider its immigration policies. The new measures are projected to result in a slight population decline of 0.2% in both 2025 and 2026 before growth resumes in 2027.

Cam Dahl, general manager of the Manitoba Pork Council, urged for regional considerations in immigration policy. “What’s good policy for Vancouver and Toronto is not going to be good policy for Notre-Dame-de-Lourdes or Brandon or Neepawa,” he said, highlighting the essential role of new Canadians in various sectors like agriculture and transportation.

While the immigration cuts are anticipated to help reduce Canada’s housing supply gap by approximately 670,000 units by the end of 2027, analysts at BMO bank noted that the move could alleviate stress on the economy and infrastructure. However, Mike Moffat, senior director of the Smart Prosperity Institute, cautioned that while there may be effects on entry-level jobs, the healthcare sector could face shortages without sufficient immigration pathways.