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<\/p>\nCanada stands to face the biggest fallout of political turmoil in the United States in 2026, a new report by the Eurasia Group warned on Friday.<\/p>\n
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The risk management firm says the long-standing relationship between the two countries \u201cis history\u201d and ongoing trade uncertainty will have an impact on the Canadian economy.<\/p>\n
\u201c(U.S. President Donald) Trump\u2019s 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<\/a> and Canadians\u2019 engagement with the rest of the world,\u201d the report says.<\/p>\n \u201cThe challenge for Ottawa \u2014 and Canadian firms more broadly \u2014 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.\u201d<\/p>\n The report warns Canada\u2019s efforts to diversify trade and international relationships will face \u201cpowerful headwinds\u201d this year, and that it will need to manage its relations with the U.S. while building new ones with other countries.<\/p>\n Story continues below advertisement<\/p>\n The relationship between Canada and the U.S. soured in 2024 following President Donald Trump\u2019s return to the White House and his threats to somehow make Canada a U.S. state.<\/p>\n Trump has imposed multiple tariffs on Canada in the months since, including devastating duties on the steel, aluminum, automotive and lumber sectors.<\/p>\n \t\t\t\t\t \t\t\t\t\tGet breaking National news<\/p>\n For news impacting Canada and around the world, sign up for breaking news alerts delivered directly to you when they happen.<\/p>\n Citing the recent U.S. military operation in Venezuela to capture President Nicolas Maduro, the report says Trump\u2019s desire to dominate the Western Hemisphere will \u201ckeep Canada on the defensive.\u201d It says Carney\u2019s government will have to defend Canadian sovereignty while acknowledging the degree to which Canada depends on the U.S.<\/p>\n \n\t\t\tMore on Canada Eurasia Group\u2019s report says Canada was \u201ccomfortable\u201d with its deep ties to the U.S. for decades, but the relationship has changed and Washington\u2019s actions could see Canadian companies and investors \u201cbecome collateral damage.\u201d<\/p>\n Diana Fox Carney, wife of Prime Minister Mark Carney, is affiliated with the Eurasia Group and Artificial Intelligence Minister Evan Solomon used to work with the group before entering politics. Gerald Butts, the vice-chairman of Eurasia Group, has been an unofficial adviser to Carney.<\/p>\n The report says Trump\u2019s actions in the U.S. could lead to domestic political revolution, which would put foreign trade and defence ties with Canada into question.<\/p>\n It warns of a \u201cZombie USMCA\u201d trade deal between the U.S., Mexico and Canada that is up for review this year. The report predicts that deal won\u2019t be formally renegotiated, extended or terminated, and will instead be a \u201czombie, neither fully dead nor alive.\u201d<\/p>\n Story continues below advertisement<\/p>\n Carney campaigned on reaching a new trade deal with the U.S. but has since said he won\u2019t sign one unless it\u2019s good for Canadians.<\/p>\n \n\t\tTrending Now\n\t<\/p>\n![\"For](\"https:\/\/www.newsbeep.com\/ca\/wp-content\/uploads\/2026\/01\/1767930311_275_national.jpg\")
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