Canada, a nation often celebrated for its political stability and polite diplomacy, now finds itself navigating a world that feels more unpredictable than ever. The events of the past year, culminating in the April 2025 federal election and a federal budget with a $78.3-billion deficit—Canada’s third largest in history—have exposed just how deeply global currents are reshaping the country’s politics, economy, and sense of national identity (National Post, November 9, 2025).
Prime Minister Mark Carney’s ascent to power in April 2025 marked a dramatic turn. Against the odds, Carney’s Liberal Party secured nearly 44 percent of the vote—a number not seen in four decades—defying expectations that the Conservatives would seize victory (Pipe Dream, November 9, 2025). The reason? Many observers point to the seismic impact of Donald Trump’s return to the White House in January 2025. Trump’s rhetoric, particularly his repeated suggestions that Canada could become the 51st American state, deeply unsettled Canadian voters and shifted the political winds in favor of the Liberals (Pipe Dream, November 9, 2025; National Post, November 9, 2025).
Yet, Carney’s win does not guarantee smooth sailing ahead. Canada’s political landscape has become sharply polarized, with the electorate nearly evenly split between Liberals and Conservatives. Smaller parties—the New Democratic Party, the Greens, and the Bloc Québécois—have seen their influence wane, as voters coalesce around the two main options (Pipe Dream, November 9, 2025). This polarization is new for Canada and has left the country’s politics more brittle and contentious than in living memory.
The April election was also a referendum on the country’s relationship with its powerful neighbor. As noted by the National Post, "Canada, as a nation economically and population-wise much smaller than the United States, is in the orbit of Washington, D.C. and will be influenced by the developments happening within the United States.” Trump’s return to power amplified these anxieties. His public musings about annexing Canada—offered both as a joke and a threat—became a rallying point for those wary of American dominance and helped the Liberals cast themselves as the party of Canadian sovereignty (Pipe Dream, November 9, 2025).
There was more at play than just rhetoric. The federal budget, tabled in early November 2025, outlined plans to spend $81 billion over the next five years to meet NATO’s new target of allocating five percent of GDP to military spending. This is a significant shift for a country that has traditionally been cautious about military expenditures. The budget also introduced a Defence Investment Agency, aiming to foster a homegrown military-industrial complex with a focus on technology, recruitment, and Arctic defense (National Post, November 9, 2025).
However, the budget conspicuously omitted any new funding for the so-called Golden Dome—a continental defense system proposed by President Trump, who dangled it before Canada for a $61 billion fee or, alternatively, offered it for free if Canada agreed to statehood. The absence of this item signals a reluctance to be drawn deeper into American security initiatives, even as Canada faces growing threats from abroad (National Post, November 9, 2025).
Canada’s support for Ukraine remains steadfast. The government continues to provide a mix of direct military aid, financial assistance, humanitarian support, and loans, amounting to roughly $22 billion so far. This includes the Canadian Forces’ ongoing deployment in Latvia as part of NATO’s European defense posture. Yet, the government failed to preempt the looming threat that another $22 billion in frozen Russian Central Bank reserves—held in Western currencies—could end up back in Moscow’s hands if the European Union’s sanctions regime collapses, a risk heightened by political maneuvering in Brussels and the actions of Hungary’s Viktor Orban, a close Trump ally (National Post, November 9, 2025).
Foreign policy challenges do not end with Russia. Relations with China have taken a surprising turn. In October 2025, Foreign Affairs Minister Anita Anand met her Chinese counterpart in Beijing, declaring that China should now be seen as a "strategic partner"—a remarkable shift given recent years’ tensions over trade disputes, allegations of election interference, and the high-profile detentions of Canadians Michael Kovrig and Michael Spavor. Carney himself has longstanding ties to Chinese officials from his time at Brookfield Asset Management, where he backed China’s ambitions to elevate the yuan and praised Xi Jinping’s focus on artificial intelligence (National Post, November 9, 2025).
But these diplomatic overtures have raised eyebrows. The Security and Intelligence Threats to Elections Task Force discovered coordinated WeChat campaigns run from regime-associated accounts in China that targeted Carney’s opponents and promoted his candidacy during the 2025 election. This revelation has fueled concerns about foreign interference and the integrity of Canadian democracy (National Post, November 9, 2025).
Domestically, Carney faces a daunting agenda. Immigration, housing, and border security dominate the national conversation. The Liberal government has pledged rapid construction of housing across the country, reinforcement of borders with additional troops, and reform of border security services over the next four years (Pipe Dream, November 9, 2025; Hill Times, November 10, 2025). These promises are designed to address rising public concern about unemployment and the affordability crisis, especially in major cities where housing prices have soared.
Yet, Carney’s biggest challenge may be holding together his diverse coalition. While the Liberals enjoy strong support among older Canadians, younger voters are increasingly disillusioned with the party, citing unaddressed economic concerns and a lingering sense of betrayal from the Trudeau years. The Conservatives, despite their recent defeat, have expanded their base and could mount a serious challenge by 2029 if they manage to shed the negative branding associated with Trump’s influence (Pipe Dream, November 9, 2025; Hill Times, November 10, 2025).
As Pipe Dream observed, “Carney represents more than being the leader of the Liberals. He is the head of a political ‘big tent’ against right-wing politics, seen as Trump’s looming shadow over Canada.” His task is to consolidate power, secure Canada’s sovereignty, and deliver on promises to address the country’s most pressing issues—a tall order in an era defined by uncertainty and fast-moving global shifts.
Canada’s experience over the past year offers a case study in how even the most established democracies can be buffeted by external forces and internal divisions. As Carney’s government tries to steady the ship, the world will be watching to see whether Canada can maintain its balance in this age of disorder.
