The AI economy is booming in the United States, with the country investing heavily in data centers and AI-related infrastructure. Meanwhile, Canada is experiencing a blip in this growth, with a slower adoption of AI and less investment in computing technology. This disparity is evident in the trade front, where Canada is largely sitting out the rush to secure AI-related equipment from overseas. The U.S. is now spending more on constructing data centers than office buildings, and its imports of processors and servers from Mexico have nearly doubled in the past year. In contrast, Canada has announced numerous data center projects but has yet to see many construction projects get underway. This is partly due to the country's smaller size and the difficulty of securing semiconductors, but the larger bottleneck is access to power in Canada's heavily regulated electricity market. Alberta, the only fully deregulated power market, is making strides in attracting data center investment, but even there, developers face opposition to their plans. Canada needs to be realistic about its data center goals and focus on addressing the growing antipathy toward AI in the country. The AI gap between Canada and the U.S. is not just about data center construction but also about the yawning disconnect between business investment in innovative technologies. Canada must invest more in AI systems to catch up with the U.S. and avoid falling further behind in productivity. The AI boom is creating trade distortions in the U.S., with imports of computer equipment and batteries accounting for a significant portion of the country's goods trade deficit. Canada must address its regulatory and power generation challenges to become a more attractive destination for data center investment and avoid being left behind in the AI race.
