🔮 51?

How Canada is digesting the undigestable

Feb 21, 2025

By Napas Thein

Canadian politics have been shaken by Trump’s calls to make Canada the 51st state, which comes amid his ruminations on acquiring Greenland (🔮10% odds in 2025) and the Panama Canal (🔮14% odds in 2025).

The first thing that stands out is that the Canada 51 market is trading at much lower odds than Panama and Greenland. This is for a number of reasons: first the deadline for Canada to enter as a state is coming up soon - the end of June.

And second, the Canada market is two-pronged: to resolve “yes,” Canada must be annexed by the US and some portion of it must be admitted as a US state. Given longstanding Republican resistance to admitting left-leaning DC and Puerto Rico, it’s likely that the statehood condition is doing a lot of work in keeping the odds down.

The first spike in the chart to ~4% occurred before Trump’s inauguration when Trump said he was willing to use “economic force” to bring Canada into the fold on January 7.

Bluff?

The dominant reaction on both sides of the border has been to call it a bluff, for example comments made by former Republican anti-Trump congressman Adam Kinzinger on Canadian TV

On the other hand, people closer to MAGA world like Steve Bannon, say Trump is deadly serious about hemispheric control, reaching for the Arctic towards a north-south economic and military corridor.

And as president, Trump continues his rhetoric, calling the Canadian Prime Minister “Governor Trudeau” at his recent announcement of sweeping reciprocal tariffs.

Trump also mentioned it this week in reference to the 4 Nations Face-Off hockey game between the two countries on Truth Social, where three fights broke out between the US and Canadian teams in the first nine seconds.

How Could the US Annex Canada?

But hey, 2% ain’t nothing. And if you’re right, you could turn $100 into a decently spec’d Macbook Pro. So let’s look at what it would actually take for the market to resolve “yes”.

According to Canadian law, Canada could peacefully join the union with unanimous support from the Canadian Senate, House of Commons, and all 10 provincial legislatures.

Trump would then need a two-thirds majority in the Senate to acquire Canada as a territory through a treaty. Then he would need a House majority and 60 votes in the Senate to make Canada a state.

But a military invasion of Canada is a different story.

Canada last faced threats of annexation in the 1860s, when it was still known as British North America, with looming sentiments of American ‘manifest destiny’ bringing in dreams of northward expansion. Politicians in now-Canadian territories freaked out, got their shit together, unified, and created what we now know as Canada in 1867.

There is also War Plan Red, a 1930s war strategy drafted by the US to prepare for a war with the UK, which they assumed would probably ally with Canada.

The closest thing to an actual invasion took place during the War of 1812 when American armies invaded what is now Canada in three failed campaigns. British army forces burned the White House, while American forces set what is now Toronto ablaze.

This put an end to America’s first attempts at northward expansion.

What Canadian Leaders Say

Trudeau's response to the threat of annexation was that there was not a “snowball's chance in hell” that Trump could annex Canada, prompting Elon Musk to clap back on X:

Despite Trudeau's firm stance, he was heard privately telling business leaders behind closed doors that Trump's annexation threats were real.

On the other hand, Canada’s likely next Prime Minister (🔮73% odds), Conservative Party Leader Pierre Poilievre has also rejected annexation.

Public Opinion

This past Saturday was Flag Day in Canada, and stores were surprised to see a surge in sales of the red maple leaf.

Canadians are taking the threat seriously. Just 1 in 10 believe that Trump is joking about annexation threats.

Nine out of 10 polled Canadians are against the idea of joining their neighbours in the South. Young people seemed more open to the idea, with 30% of those 18-34 saying they would be open to it if they could get U.S. citizenship and convert their Canadian assets to USD.

And while more Americans oppose the idea of having Canada join the US, 36% of Americans still support it.

Economic Force?

All this discussion comes against the backdrop of Trump’s trade pressure against Canada.

Although Trump initially promised 25% tariffs on Canada and Mexico on Day 1, he backtracked and pushed for a new deadline of February 1. Canada and Mexico, however, got a last-minute reprieve.

Tariffs could be a sign of Trump’s plans to use “economic force” to annex Canada. Unless further delays are implemented, tariffs will be in place by March 4. But it seems that further negotiations are on the table: on Polymarket there’s only a 45% chance a general tariff is in effect against Canada by May 1.

Some in Canada’s business community see upside from closer economic, if not political ties with the US. Perhaps the highest profile of these voices is Kevin O’Leary, AKA “Mr. Wonderful,” famous for his role on Shark Tank, who spoke out in favour of an “economic union” with the United States.

He and Alberta Premier Danielle Smith went to Mar-a-Lago to meet with Trump in early January.

Next Canadian Governor Prime Minister?

The Trump plan to annex Canada may be affecting Canadian politics at a fundamental level.

Canada is set for a new leader this year, with its next election scheduled for October 20, 2025. A few months ago, conservative opposition leader Pierre Poilievre was the 90% favorite for Prime Minister, but there has been slippage in his odds beginning around the time of Trump’s inauguration.

This likely reflects that Canadians will have to judge which candidate is best equipped to face Trump’s pressure campaign from the south. And that Canada is not just facing threats, but an existential crisis.

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