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"It's not "racist" in the sense you're thinking, it's nationalist. Nationalism is historically a more palatable branding for bigotry and xenophobia.

There's ostensibly nothing wrong with saying "Canada is a good country", because who doesn't think that? But the catch is that Canada isn't intrinsically a good country, it just is. Any good that happens in Canada is a product of the efforts of people in Canada who have gone out of their way to purposefully do constructive things.

"Canada First" (or any "[insert nation] first") has always been about emphasizing national identity as a point of pride, but also a point of division. It's a message that says "WE are good because we are Canadian, and we DESERVE good things because we are Canadian. People who are NOT Canadian are not like us." It celebrates a notion of intrinsic entitlement to pride by virtue of being something, not doing something. You may not have been responsible for any of the things people positively associated with Canada, but you're Canadian, and thus their accomplishments are necessarily your accomplishments.

When people start to believe they have an intrinsic entitlement to pride by virtue of what they ARE (some inalienable trait baked into them), they tend to focus on whether other people are the same thing they are to determine if they're "worthy". It becomes a very slippery slope to bigotry, mostly because that's the messaging the bigots were already using. Once people in positions of moral authority start echoing the same rhetoric the bigots were already using, the bigots stop being a fringe movement and begin being mainstreamed.

So the problem with "Canada First" is that it's a dogwhistle for xenophobia and a rally cry for bigots. It tells people they should be proud of what they are, not what they've accomplished, and that other people should be judged based on what they are, not what they've done.

Bigotry aside, nationalism is also just a shitty, dead-end philosophy. Societies are a product of the actions of people in society. Everything we have was only possible because people in the past persevered and overcame hurdles to build more than they started with. Once people are convinced that simply existing is enough, that there's no pride greater than being a resident of Canada, they have no incentive to try. If the single best thing you can ever accomplish is to have been born here, nothing you do will ever top that so why bother?

Nationalism is a philosophy for weak men who are too afraid to be judged by their feats, so they need to hide behind the safety blanket of national pride. For them, being born here was the greatest thing they will ever accomplish, and if that isn't the metric that society judges people by, they'll fade into obscurity. This terrifies them, and so they must ensure this is the only lens they can be viewed through."