Key Takeaways
- Canada is vulnerable to political turmoil in the U.S. due to deep economic, security, and geographic ties.
- The Eurasia Group’s "Top Risks For 2026" report cites a potential U.S. "political revolution" as the most significant threat to global stability this year.
- The Arctic, particularly Greenland, is an emerging "chokehold" point that could directly affect Canadian sovereignty and security.
- Canada’s vulnerability is compounded by a lack of domestic engagement and preparedness.
- The country may face challenges in diversifying trade away from the U.S. due to the "Europe under siege" risk.
Introduction to the Risks
The Eurasia Group’s "Top Risks For 2026" report has warned that no country would be more "profoundly affected" by a political upheaval in the U.S. than Canada. This is due to the deep economic, security, and geographic ties between the two countries. Former foreign affairs minister Lloyd Axworthy has weighed in on the issue, stating that Canada is exposed to instability south of the border because of its close ties to the U.S. through geography, trade, and defence. This means that sudden political or policy changes in Washington could have an outsized impact on Canada.
The Trump Administration’s Impact
According to Axworthy, the Trump administration has a view that they are the masters of the Western Hemisphere, and they can do what they want to whomever they want, whenever they want. This approach is likely to lead to a more aggressive and transactional U.S. approach to national security and geopolitics. Axworthy warned that Canada must be prepared for this new reality and take steps to protect its interests. The Trump administration’s efforts to consolidate power and "capture the machinery of government, and weaponize it against his enemies" are seen as a significant threat to global stability.
The Arctic as a Pressure Point
Axworthy pointed to the Arctic, particularly Greenland, as an emerging "chokehold" point that could directly affect Canadian sovereignty and security. The region is becoming increasingly important due to melting ice, which is opening up new shipping routes and access to critical minerals. The Eurasia Group’s report highlights growing competition between the world’s great powers in the Arctic, which increases the stakes for Canada. Both the U.S. and Russia are expanding their presence in the region, which could lead to a challenge to Canadian sovereignty.
Canada’s Vulnerability
Axworthy cautioned against assuming that shared values alone will protect Canadian interests. Instead, he emphasized the need for Canada to be actively engaged in the region and to take steps to protect its sovereignty. The country’s vulnerability is compounded by a lack of domestic engagement and preparedness. Axworthy stated that Canadians need to be more aware of the issues at play and that the government needs to bring Canadians along with it in its efforts to protect the country’s interests.
Global Co-operation and the Risks Ahead
The report outlines multiple geopolitical risks, including the "Europe under siege" risk, which could make Prime Minister Mark Carney’s goal of diversifying trade away from the U.S. more challenging. The prolonged Russian invasion of Ukraine and economic strain across the continent could have ripple effects for Canada, including higher defence spending commitments, pressure to take in more refugees, and economic spillover effects. Axworthy warned that global co-operation is breaking down at a time when it’s needed the most, and that Canada needs to be prepared to navigate this new reality.
The Year Ahead
The Eurasia Group’s report flags several risks that could have a significant impact on Canada in the year ahead. The "Zombie USMCA" risk refers to the North American Free-Trade Agreement, or NAFTA, staggering forward without meaningful updates or political commitment. This could lead to prolonged uncertainty, which could chill investment, disrupt cross-border supply chains, and leave Canada vulnerable to sudden policy shifts from the U.S. The report also predicts that the "Europe under siege" risk will make it more challenging for Canada to diversify its trade away from the U.S. Overall, the year ahead is likely to be pivotal for Canada, and the country needs to be prepared to navigate the complexities of the global landscape.