Foreign direct investment into Canada hit nearly $100-billion last year, the highest level since 2007, and Prime Minister Mark Carney has touted the trend as proof of Canada’s appeal to global capital. But a closer examination of the numbers shows the surge is overwhelmingly driven by American buyers acquiring Canadian companies, a dynamic that carries added weight amid an ongoing trade dispute with the Trump administration.
Speaking to an audience of Wall Street executives in May, Carney told the Economic Club of New York that foreign investment into Canada was running at twice the rate of the country’s nearest G7 peer. Ottawa is now looking to build on that momentum at its first Canada Investment Summit, a gathering in Toronto billed as the largest assembly of global financial leaders the country has hosted. The event is part of a government push to attract $1-trillion in investment over five years to support a range of large infrastructure and nation-building projects.
For the first six months of 2026, foreign direct investment into Canada totalled $44.7-billion, with more than two-thirds of that amount originating in the United States. Toronto-Dominion Bank economist Maria Solovieva said there has been very little investment coming from outside the U.S. for roughly the past year, describing the trend simply as American money “coming back.” Desjardins macro strategist Tiago Figueiredo called the degree of concentration “unusual” in a late-August report.
The shift marks a sharp reversal from longer-term patterns. Jordan Brennan, managing director of thought leadership at Royal Bank of Canada, noted that the U.S. share of Canada’s inbound foreign investment had been cut in half over the past two decades, settling at an annual average of around 26 per cent. In 2025, however, American investors accounted for more than half of Canada’s $96.8-billion in total FDI inflows, and that share appears poised to grow further this year.
A significant portion of that American investment has come in the form of mergers and acquisitions rather than new projects. M&A activity made up $43.6-billion, or nearly half, of last year’s total FDI, well above the roughly one-third historical average cited in a recent C.D. Howe Institute report. The report cautioned that such flows often amount to little more than a change in ownership of assets that already exist in Canada, rather than new economic capacity.
Bank of Montreal chief economist Doug Porter made a similar point in an August 28 report, describing M&A as the most contentious component of foreign direct investment because it is not always a net positive for the economy. He said the recent uptick in FDI since the start of 2025 has been led first by M&A activity, followed by retained earnings that foreign firms keep in Canada, with new investments such as factory construction trailing well behind.
Not every category of foreign inflow has raised the same concerns. Portfolio investment, which covers foreign purchases of Canadian stocks and bonds, has been notably strong so far in 2026. Foreign demand for Canadian bonds in particular has helped keep domestic yields low even as fixed-income markets elsewhere have sold off, giving Canadian governments and companies access to comparatively cheap borrowing. Porter noted that Government of Canada bond yields currently sit a full percentage point below comparable U.S. bonds. He also cautioned that portfolio investment is less stable than other forms of FDI, making it more prone to swings.
Experts point to Canada’s low capital stock per worker as one measure that could benefit from sustained portfolio investment. Capital stock refers to the machinery and equipment available to workers, with higher levels generally associated with greater output per worker. A joint analysis published September 8 by Royal Bank of Canada and McKinsey found Canada’s capital stock per worker stands at roughly $125,000, the fourth-lowest among 17 advanced economies studied. By comparison, the same analysis put U.S. capital stock per worker at $337,000, while Australia’s figure of $240,000 was nearly double Canada’s.
Jim Balsillie, former co-CEO of BlackBerry Ltd. and now chair of the Council of Canadian Innovators, argued that part of the reason Canada has struggled for decades to improve such productivity measures is that government policy tends to promote all foreign direct investment without distinguishing between purchases of physical assets and infrastructure versus acquisitions of technology firms that generate intellectual property. He said investment in traditional sectors can bring benefits such as new industrial facilities, jobs, local supply chains and added tax revenue, but suggested the dynamic is different when it comes to digital-sector acquisitions.
As Ottawa works to reduce Canada’s economic reliance on the United States, the composition of the current investment boom is likely to remain a point of scrutiny heading into and beyond the investment summit.
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