Canada Cuts Temporary Immigration, Opens Residency Path For H-1B Visa Holders

Canada is undergoing its most significant immigration policy reform in decades, with the federal government announcing plans to cut the number of temporary residents by nearly one-third while introducing a streamlined pathway for U.S.-based H-1B visa holders and other skilled professionals to gain permanent residency.

The new direction, unveiled under Budget 2025 and the 2026–2028 Immigration Levels Plan, signals a strategic shift from population-driven immigration to a skills-focused model. The move comes as the country struggles with housing shortages, healthcare pressures, and rising public concern over record population growth.

At the same time, Ottawa is doubling down on efforts to draw top-tier talent from the United States. A new immigration stream will enable up to 33,000 H-1B visa holders and other professionals to transition directly to permanent residency in Canada by 2027.

According to officials, the initiative aims to strengthen Canada’s innovation, technology, and research sectors, while countering restrictive immigration trends emerging in the U.S.

Government’s Position

“We’ve exceeded our capacity in recent years,” Finance Minister François-Philippe Champagne said while presenting the plan to Parliament. “Our goal now is to build a stronger, more sustainable Canadian economy by focusing on balance, resilience, and skill-based growth.”

While the overall number of permanent residents will remain steady at 380,000 per year through 2028, the makeup of new arrivals will shift. Economic-class immigrants — including skilled workers and entrepreneurs will rise to 64% of total admissions, up from 59%, reflecting a tighter alignment between immigration and labor market priorities.

The policy adjustments come amid changing public sentiment. A recent Environics Institute survey revealed that 56% of Canadians now view immigration targets as too high a marked shift from the generally positive outlook seen over the past decade.

Labour Market Realities

A recent report from Employment and Social Development Canada (ESDC) projects 8.1 million job openings across the country between now and 2033. Over 100 occupations face potential shortages, with growing demand across healthcare, construction, and technology sectors.

Meanwhile, the immigration processing backlog continues to improve. As of March 2025, pending applications totaled 821,200, down nearly 8% from January and marking the third straight month below one million.

Key Takeaways

The government has already introduced measures to slow population growth, including a 35% cut to international student visas and a 50% reduction in new temporary foreign worker entries.
By late 2027, temporary residents are expected to make up less than 5% of Canada’s population a sharp decline from record levels in 2023.
Budget 2025 also allocates $1.7 billion over 13 years to attract global researchers and $97 million to accelerate the recognition of foreign credentials, particularly in healthcare and engineering.

Immigration Minister Marc Miller described the reforms as “a shift toward high-impact talent,” emphasizing their role in helping regions adapt to changing supply chains and evolving U.S. trade policies.