Canada is shifting gears on immigration. In its biggest policy overhaul in decades, the federal government has unveiled a plan to reduce the number of temporary residents by as much as one-third while creating a new fast-track pathway for U.S.-based H-1B visa holders and other highly skilled professionals to become permanent residents.
The changes, announced under Budget 2025 and the 2026–2028 Immigration Levels Plan, reflect a pivot from population-driven growth to skills-based immigration as Canada grapples with housing shortages, healthcare strain, and public concern over record arrivals.
At the same time, Canada is positioning itself to attract high-value talent from the United States. A new immigration stream will allow up to 33,000 H-1B visa holders and other skilled professionals to transition directly to Canadian permanent residency by 2027.
Officials say the program is designed to strengthen the country’s innovation and research sectors while countering restrictive immigration trends in the U.S.
What Canada officials said
“We’ve exceeded our capacity in recent years,” said Finance Minister François-Philippe Champagne, presenting the plan in Parliament. “Our focus now is building a stronger, more resilient Canadian economy through balance, sustainability, and skills-driven growth.”
Permanent immigration levels will hold steady at 380,000 per year through 2028, but the composition will change. Skilled workers, entrepreneurs, and other economic-class immigrants will make up 64% of total admissions, up from 59%, highlighting Ottawa’s intention to better align immigration with labor market needs.
The reforms come as public attitudes toward immigration shift. A recent Environics Institute poll found that 56% of Canadians believe immigration targets are too high, a sharp reversal from the broadly positive sentiment that characterized much of the past decade.
Labour market context
Canada’s labor market is facing significant challenges, with 8.1 million job openings projected between now and 2033, according to a recent report from Employment and Social Development Canada (ESDC).
The report identifies more than 100 occupations at risk of shortages, with demand rising sharply in healthcare, construction, and technology.
Meanwhile, Canada’s immigration backlog has improved. As of March 2025, the total backlog stood at 821,200, a 7.95 per cent decline from 892,100 in January, marking the third consecutive month it has stayed below one million.
What you should know
- The government says previous measures, including a 35% cut to international student visas and a 50% reduction in new temporary foreign worker entries, have already begun to slow population growth.
- Officials estimate that by late 2027, temporary residents will make up less than 5% of Canada’s total population, down from record highs in 2023.
- Budget 2025 also earmarks $1.7 billion over 13 years to attract international researchers and $97 million to improve recognition of foreign credentials, particularly in healthcare and engineering.
Immigration Minister Marc Miller described the effort as “a pivot toward high-impact talent,” aimed at supporting regions affected by shifting supply chains and U.S. trade policies.
