In 2025, the Canadian economic landscape is rocked by an intense debate about foreign subsidies and their impact on the domestic tech sector. Terry Newman, the CEO of Shopify, recently weighed in on the issue, calling these subsidies “toxic.” While the Liberal government aims to attract international companies with substantial financial incentives, critics are highlighting the risks to the fairness and competitiveness of local Canadian businesses.
Foreign subsidies: an asset or a bane for the Canadian economy? Terry Newman recently took a public stance against the foreign subsidies allocated by the Liberal government, claiming they are “toxic” to the domestic economy. However, what motivates this bold assertion? At first glance, these subsidies seem beneficial, creating jobs and stimulating the economy by attracting large international companies. But scratching beneath the surface reveals a more nuanced reality.
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First, it is crucial to understand how these subsidies work. In its quest to boost Canada’s tech economy, the Liberal government offers substantial financial incentives to foreign companies to establish themselves in Canada. This often includes tax breaks, preferential loans, or even direct subsidies.
However, this strategy is not without consequences. For Canadian companies like Shopify, these subsidies represent a competitive disadvantage. Indeed, foreign companies, thanks to reduced costs, enjoy an unfair advantage. As Newman points out, this phenomenon diminishes the competitiveness of local businesses that do not have access to the same support.
The issue might seem purely economic, but it also has social repercussions. By offering substantial subsidies to foreign companies, Canada is essentially investing in their success at the expense of local businesses. The profits generated by these companies often enrich their countries of origin rather than supporting the national economy. This phenomenon is evident in the case of Nokia, which received $72 million to create 340 jobs in Ottawa, a move that has drawn criticism regarding its actual effectiveness for the Canadian economy.
| The Reality of the Numbers | Let’s look at the numbers. Between 2020 and 2024, while investments in research and development increased by 2.5%, international patent applications filed by Canadians decreased by 2.5%. Meanwhile, venture capital deals declined by 3.1%, raising questions about the attractiveness of the Canadian technology ecosystem. | Year | |
|---|---|---|---|
| R&D Investments | Patent Filings | Venture Capital Deals | 2020 |
| +2.5% | -1.0% | -0.5% | 2024 |
+2.5%
-2.5%
-9.3%
In this context, Terry Newman’s critical stance gains relevance. The danger for the Canadian economy is that these subsidies create an excessive dependence on large international players, to the detriment of local innovation and the sustainability of Canadian jobs.
The technology industry is particularly sensitive to the issue of foreign subsidies. Many experts believe these subsidies stifle the inherent dynamism of the Canadian ecosystem by distorting competition. In a sector where innovation and rapid progress are essential, market distortion caused by external financial biases can have disastrous consequences.
For example, current government funding policies favor foreign companies such as the tech giant Nokia. While these companies benefit from public funds to reduce their operating costs, local tech companies like Shopify face unfair competition. Their foreign counterparts can invest a larger portion of their budget in research, development, and talent acquisition, while Canadian companies often struggle to survive with limited resources. Terry Newman, CEO of Shopify, strongly criticizes the Liberal government’s foreign subsidies, which he calls “toxic,” and calls for urgent reform. Critics argue that these foreign incentive policies undermine Canadian companies’ ability to attract and retain talent. According to INSEAD’s 2025 Talent Competitiveness Ranking, Canada is ranked 14th, but it still struggles to retain local talent, largely due to the disparity in terms offered by subsidized companies.
- Concrete examples: In the Canadian context, here are some examples illustrating the impact of foreign subsidies:
- Nokia’s integration into the Canadian landscape was supported by a $72 million job creation grant, which translates to a cost of $200,000 per job—a price most local businesses cannot afford.
The lack of venture capital for Canadian companies, which declined by 9.3% between 2023 and 2024, exacerbates this situation, further limiting local innovation.
Despite increased R&D investment, the anticipated positive impact on patents and innovation has not materialized, calling into question the effectiveness of these strategies.
Finally, these policies raise questions about Canada’s true ability to position itself as a leader in the global race for technological innovation. The current subsidy strategy appears to support political pronouncements more than sustainable economic benefits for the country. Terry Newman and His Critique of Public Policy
Terry Newman, with his frank criticism of foreign subsidies, highlights a point often overlooked in public discourse: the risk of inefficient management of public funds. According to him, taxpayers’ money should not be used to strengthen multinational corporations at the expense of Canadian businesses. On the contrary, this funding should support local players who demonstrate innovation and dynamism.
Newman’s statement comes at a time when Canada is not at the forefront of global innovation rankings, placing 17th for overall innovation according to the World Intellectual Property Organization (WIPO). This position raises questions about the effectiveness of current public policies in truly stimulating technological progress in Canada.
Newman’s argument is gaining traction in political discussions as Canadians become more aware of the costs associated with these incentive strategies. Subsidies granted to foreign companies often deprive local innovators of the necessary funds and resources.
As a result, calls for a reassessment of public policies on public funding are increasing. A growing number of voices are calling for a redirection of resources toward Canadian SMEs, the breeding ground for national innovation. This would not only maximize the impact of public investments but also ensure balanced and sustainable growth for Canada’s technology economy.
However, this approach has not convinced everyone. Critiques like Newman’s highlight a dichotomy between apparent political successes and the real economic stakes. Ongoing discussions question what form more balanced policies might take, policies that aim to protect national interests while remaining open to international opportunities. The Future of the Canadian Economy in a Globalized Context
The question of the Canadian economy remains crucial. The investment strategy of foreign giants, partly supported by subsidies, highlights the challenges faced by local businesses.
To survive in this environment, Canadian companies must explore strategic alternatives. This could include deepening their e-commerce capabilities and adopting new technologies, such as AI, to strengthen their competitiveness (see here). Terry Newman, CEO of Shopify, strongly criticizes the Liberal government’s foreign subsidies, calling them “toxic” to the local economy.
- However, the future cannot rest solely on the shoulders of businesses. Government policies must evolve to foster an environment conducive to local innovation. As Newman points out, these policy changes must provide both direct resources and support to Canadian businesses, while ensuring that large international companies actively contribute to the national economy.
The challenges ahead: Maintaining a balance between international attractiveness and local support is a delicate but necessary exercise. Here are some of the challenges ahead: