Canada could experience the most significant consequences from political instability in the United States by 2026, according to a new report released by the Eurasia Group on Friday.
The risk management firm claims that the deep-rooted relationship between both nations “is history” and the ongoing trade uncertainties will affect Canada’s economy.
“(U. S. President Donald) Trump’s systematic effort to dismantle checks on his power and weaponize the machinery of government against his political enemies will inevitably reshape not only Canada-U. S. relations, but the Canadian economy and Canadians’ engagement with the rest of the world,” states the report.
“The challenge for Ottawa – and Canadian firms more broadly – will be to play defence and offence at the same time: managing an unpredictable and unreliable U. S. while carving out new roles in an increasingly unstable G-Zero world.”
The report indicates that Canada’s attempts to diversify trade and international relationships will face “powerful headwinds” this year, requiring it to navigate its relationship with the U. S. while fostering new connections with other nations.
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The ties between Canada and the U. S. deteriorated in 2024 after President Donald Trump returned to office, making threats about potentially turning Canada into a U. S. state.
Since then, Trump has slapped numerous tariffs on Canadian goods, severely affecting industries like steel, aluminum, automotive, and lumber.
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p>This resulted from Washington halting trade discussions following Ontario Premier Doug Ford’s release of an anti-tariff ad in America featuring former president Ronald Reagan criticizing tariffs.
“The good news is that tariff exemptions for CUSMA-compliant goods will keep free trade on life support , leaving Canada (and Mexico) with lower average effective U. S. tariff rates than much of the world , ” says the report.
“The bad news is that Trump will use sectoral tariffs on goods such as autos , steel , and aluminum – sectors he wants reshored back to the U. S. – as leverage during endless negotiations , where Washington aims to divide and conquer Ottawa and Mexico City. ”
As Canada looks toward diversifying its trading partnerships , Eurasia Group warns about European countries being fragmented due to shifting political climates. It highlights how countries like the U. K., France , and Germany are facing potential paralysis or even destabilization.
It also flags possible Russian hybrid attacks targeting Canadian Forces as retaliation for Canada’s unwavering support towards Ukraine.
“While Europe’s rearmament creates opportunities for both Canadaandsomefirmsfordeepeningstrategiccommercialtieswiththecontinent, presureonnato statesrespondtorussianpresidentputinprovocationsriskpullingcanadaintoanato-russia crisisthisyear,”it adds.
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For news impacting Canada and around the world, sign up for breaking news alerts delivered directly to you when they happen. Citing a recent military operation by the U. S. in Venezuela aimed at capturing President Nicolas Maduro, the report mentions that Trump’s ambition to dominate Latin America will “keep Canada on the defensive.” It highlights that Carney’s government must defend Canadian sovereignty while recognizing how much Canada relies on its neighbor. More on Canada More videos Eurasia Group’s findings suggest that Canada was “comfortable” with its strong ties to Washington for many years; however, changes in this relationship may leave Canadian businesses vulnerable as they might become “collateral damage.” Diana Fox Carney, who is married to Prime Minister Mark Carney, is linked with Eurasia Group while Artificial Intelligence Minister Evan Solomon previously worked there before entering politics. Gerald Butts, vice-chairman of Eurasia Group, has been an informal adviser to Carney. The report warns that actions taken by Trump could spark domestic political upheaval in America which may raise questions regarding foreign trade agreements and defense ties with Canada. A concerning outlook is presented for what is termed a “Zombie USMCA” trade agreement among the U. S., Mexico, and Canada that is set for review this year. The report anticipates it won’t see formal renegotiation or termination but rather remain in limbo as a “zombie,” neither fully dead nor alive. Story continues below Carney ran his campaign promising a new trade agreement with Washington but has since stated he won’t endorse any deal unless it benefits Canadians adequately. Trending Now
Main suspect charged after discovery of over 100 human skeletal remains found in Pennsylvania home
The Canadian government continues using X amid scandal involving child sex abuse material on platform
p>This resulted from Washington halting trade discussions following Ontario Premier Doug Ford’s release of an anti-tariff ad in America featuring former president Ronald Reagan criticizing tariffs.
“The good news is that tariff exemptions for CUSMA-compliant goods will keep free trade on life support , leaving Canada (and Mexico) with lower average effective U. S. tariff rates than much of the world , ” says the report.
“The bad news is that Trump will use sectoral tariffs on goods such as autos , steel , and aluminum – sectors he wants reshored back to the U. S. – as leverage during endless negotiations , where Washington aims to divide and conquer Ottawa and Mexico City. ”
As Canada looks toward diversifying its trading partnerships , Eurasia Group warns about European countries being fragmented due to shifting political climates. It highlights how countries like the U. K., France , and Germany are facing potential paralysis or even destabilization.
It also flags possible Russian hybrid attacks targeting Canadian Forces as retaliation for Canada’s unwavering support towards Ukraine.
“While Europe’s rearmament creates opportunities for both Canadaandsomefirmsfordeepeningstrategiccommercialtieswiththecontinent, presureonnato statesrespondtorussianpresidentputinprovocationsriskpullingcanadaintoanato-russia crisisthisyear,”it adds.Source link
