Eurasia Group says no country more at risk than Canada in relations with the U.S.

A new report by the Eurasia Group is warning no other country will be as “profoundly affected” by political turmoil in the United States than Canada will be in 2026.

The risk management firm says the long-standing relationship between the two countries “is history,” and ongoing trade uncertainty will impact the Canadian economy.

It says Canada’s efforts to diversify trade and relationships will face “powerful headwinds” this year, and that the country will need to manage its relations with the U.S. while building new ones with other countries.

The relationship between Canada and the U.S. soured in 2024 following President Donald Trump’s election and his threats to make Canada a U.S. state.

In the months since, Trump has imposed multiple tariffs on Canada, including devastating duties on the steel, aluminum, automotive and lumber sectors.

Eurasia Group’s report also says Canada was “comfortable” with its deep ties to the U.S. for decades, but the relationship has changed and actions from Washington could see Canadian companies and investors “become collateral damage.”

This report by The Canadian Press was first published Jan. 9, 2025.