Hours after announcing steep tariffs on Canada, President Donald Trump raised concerns about what he called the unfair treatment of American banks in the Canadian market. In a Truth Social post, he claimed, “Canada doesn’t allow American Banks to do business in Canada, but their banks flood the American Market.”
While the issue rarely surfaces in discussions with top American banking executives, Trump has mentioned it multiple times, framing it as part of a broader economic imbalance between the two countries.
Can U.S. Banks Operate in Canada?
Yes, but with restrictions.
Canada’s banking sector is dominated by its “Big Six” institutions, including the Royal Bank of Canada and TD Bank, which handle core banking activities such as deposits, mortgages, and corporate financing. Canadian consumers still prefer in-person banking, making market entry difficult for new competitors.
Foreign banks, including American ones, must either:
- Partner with a Canadian financial institution,
- Establish a Canadian subsidiary, or
- Obtain special government permission.
Additionally, U.S. banks cannot operate retail branches that take small deposits (under approximately $100,000) unless they comply with Canada’s strict capital reserve requirements. Given the regulatory burdens and market dominance of Canadian banks, many American financial institutions limit their Canadian presence to investment advisory services rather than full banking operations.
James R. Thompson, a finance professor at the University of Waterloo, noted that “the regulatory burden is an additional cost for what would start as a small prize,” making large-scale expansion unattractive.
The largest American lender, JPMorgan Chase, has around 600 employees in Canada—just a fraction of its global workforce of over 300,000.
Why Is Canada So Restrictive?
Canada’s banking system is tightly regulated and has far fewer banks than the U.S.—just a few dozen compared to more than 4,000 in America. More than 75% of Canadian bank deposits are held by the Big Six.
Supporters of Canada’s model argue that limiting foreign competition helped shield the country from the 2008 financial crisis, which hit U.S. banks hard. Canadian officials point out that American banks are still present in the country, though their market share is small.
On Tuesday, Prime Minister Justin Trudeau responded to Trump’s criticism, stating that “American banks are alive and well and prospering in Canada.” The Canadian Bankers Association added that 16 U.S. banks operate in Canada, holding nearly $79 billion in assets—though that accounts for only 1-2% of the country’s total $6.5 trillion in bank assets.
“The major impediment faced by U.S. banks,” said Laurence Booth, a finance professor at the University of Toronto, “is simply they can’t compete with the Canadian banks as they don’t have the scale, while they can’t take any of them over as there are restrictions on foreign ownership.”
Do Canadian Banks ‘Flood’ the U.S. Market?
Canadian banks do have a significant presence in the U.S., but they are far from dominant.
International banks, including Canadian ones, are largely free to establish operations in the United States, which is a global financial hub. The U.S. banking market is more lucrative in some respects, offering products like 30-year mortgages (whereas the most common Canadian mortgage term is just five years).
The largest Canadian player, TD Bank, operates over 1,000 branches in the U.S., making it comparable to mid-sized regional banks like Citizens and Fifth Third. However, the Canadian Bankers Association reports that Canadian institutions hold less than 3.5% of total U.S. bank assets.
Is This Even a Priority for Wall Street?
Not really.
While Trump’s policies have aligned with Wall Street interests in areas such as deregulation and tax cuts, expanding into the Canadian market has not been a major demand from American banks.
On Tuesday, the U.S. banking trade group, the Bank Policy Institute, declined to comment, and no major Wall Street executive has raised the issue publicly.
Instead, banks are focused on more immediate concerns—such as the financial impact of Trump’s tariffs. Over the past month, the KBW Nasdaq Bank Index, which tracks banking stocks, has dropped 8%, reflecting investor worries about the broader economic consequences.
Bottom Line
Trump’s claim that U.S. banks cannot do business in Canada is misleading. While they face significant restrictions and market barriers, American banks do operate in Canada—albeit on a small scale. Meanwhile, Canadian banks have found opportunities in the U.S., but they are far from dominant players in the American financial system.
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