Canada Faces Heightened Economic Risks Amid U.S. Political Turmoil, Eurasia Group Warns

Canada could face greater economic and political risks than any other country due to ongoing instability in the United States, according to a new report from the risk analysis firm Eurasia Group.

The report notes that the historically close ties between Canada and the U.S. are undergoing significant strain, with trade uncertainty posing potential challenges for the Canadian economy. Efforts to expand trade relationships beyond the U.S. may encounter “powerful headwinds” this year, the report adds.

Relations between the two countries deteriorated after former U.S. President Donald Trump’s 2024 election, when he made controversial remarks including the suggestion that Canada could become a U.S. state. In the following months, the U.S. imposed tariffs affecting Canadian steel, aluminum, automotive, and lumber sectors, contributing to economic pressures.

Eurasia Group highlights that for decades Canada relied heavily on its U.S. ties, but current political developments may leave Canadian companies and investors vulnerable to decisions made in Washington. The firm warns that Canada will need to carefully navigate its relationship with the U.S. while pursuing new international partnerships.