The Top Risks of 2025 and Their Implications for Canada: Eurasia Group

New York, NY (Jan. 8, 2025) – Eurasia Group has released its annual Top Risks report, forecasting the political risks most likely to play out in 2025. Country-specific addendums for Canada, Europe, Brazil, and Japan further illustrate how global risks play out in different parts of the world, with specific implications for governments and businesses.

Top Global Risks 2025

We are heading back to the law of the jungle. A world where the strongest do what they can, while the weakest are condemned to suffer what they must. And the former – whether states, companies, or individuals – can’t be trusted to act in the interest of those they have power over.

It’s not a sustainable trajectory, and it leads to a “G-Zero world” in which no one power or group of powers is both willing and able to drive a global agenda and maintain international order. That global leadership deficit is growing critically dangerous.

In 2025, this is a recipe for endemic geopolitical instability that will weaken the world’s security and economic architecture, create new and expanding power vacuums, embolden rogue actors, and increase the likelihood of accidents, miscalculation, and conflict. The risk of a generational world crisis, even a new global war, is higher than at any point in our lifetimes.

The central problem facing the global order is that core international institutions – the United Nations Security Council, the International Monetary Fund, the World Bank, and so on – no longer reflect the underlying balance of global power. This is a geopolitical recession, a “bust cycle” in international relations that can be traced back to three causes.

To read more, download the Top Risks report from Eurasia Group.

Implications For Canada

Canada benefited for decades from an international order conducive to its interests and values. Under the protective umbrella of the United States, Canadians enjoyed freer trade with their neighbour to the south and influence in the multilateral institutions – the UN, the G7, and NATO, among others – that set the global agenda. Canadian officials moved confidently through a world where might did not make right, where democracy, human rights, and the rule of law steadily advanced, and in which they enjoyed privileged relations with the world’s democratic superpower.

In 2025 it will become clear that we are in a new era of global politics: a G-Zero world in which no one power or group of powers is willing and able to drive a global agenda and maintain international order. That global leadership deficit will be exacerbated by an ongoing geopolitical recession – a “bust cycle” in international relations in which core international institutions no longer reflect the underlying balance of global power.

The G-Zero leadership deficit means the prospects for peaceful reform or renewal of the global order are slim. Combined with the mismatch between global power and institutions, it’s a recipe for endemic geopolitical instability. That’s why “The G-Zero wins” is Eurasia Group’s Top Risk #1 for 2025.

A likely new Conservative government as well as Canadian businesses will need to navigate a much more dangerous global environment. For a country used to following rules and often taking its own security for granted, the stark realities of G-Zero will be a rude awakening. Ottawa has already had a taste of what to expect amid allegations of foreign interference by China and India and, more recently, new tariff threats from US President-elect Donald Trump.

Here are some of the key takeaways from this year’s top risks for Canada and Canadians:

• Eurasia Group has warned for over a decade about the dangers of a G-Zero world, but that leadership deficit will grow critically dangerous in 2025 amid a deepening geopolitical recession. The cumulative impact will be a weakening of the world’s security and economic architecture, the emergence and expansion of power vacuums, more space for rogue actors, and the increased likelihood of accidents, miscalculations, and conflict.
• Trump’s return to office with a politically consolidated “America First” administration will accelerate Washington’s abdication of its longstanding role as global policeman, champion of free trade, and defender of global democratic values. No other country or combination of countries is both willing and able to lead. As a result, the world will become more combustible as we enter a uniquely dangerous period of world history.
• For Canada – a country whose trade, foreign, and defence policies were built on the foundation of American partnership and a US-led global order – the deepening G-Zero will be especially fraught. Not only will Ottawa face considerable pressure from a much less reliable Washington to rapidly increase defence spending, but its other traditional G7 allies are unprecedentedly weak. Canada has few good options in the short term to navigate a much more hostile and uncertain world.
• Over the longer term, Canada will struggle to build and maintain credibility with allies and adversaries alike without a new “hard power” toolkit. But that hinges on a broader foreign policy shift towards a more robust defence of Canadian national interests – something that will not come naturally to politicians and policymakers in Ottawa. Like it or not, however, the world is heading back to the law of the jungle … and Canada will need to adapt quickly to the new global reality.
• Canadian companies operating in the US will be highly exposed to the arbitrary decisions and impulses of the most powerful man in Washington, and heightened structural volatility in US policymaking will degrade America’s business and investment climate. US-Canada relations, meanwhile, will whipsaw according to the whims of the mercurial president, and though the bilateral relationship – like the American republic – will survive the next four years, it will be tested like never before.
• In that context, the breakdown of US-China relations this year will leave Ottawa caught between an assertive Beijing and a unilateralist Washington. Although the Trump administration will expect Canada to fall in line with hawkish US policies toward China – from tariff hikes to export controls and diplomatic and military pressure – it will be less willing than ever to work collaboratively with its northern ally. The US will push Canada to match and mirror its policies, with the ever-present threat of tariffs used as leverage to force compliance.
• Although Canada is behind China and Mexico on Trump’s list of trade targets, it is acutely vulnerable to his tariff threats. While Trump will inherit a robust US economy, his tariff and immigration policies will undermine its strength through higher inflation and reduced growth. A stronger US dollar – bolstered by a Federal Reserve forced to keep interest rates higher for longer – will put further downward pressure on the Loonie, and weaker US demand will weigh on an already sputtering Canadian economy. Add to that the potential for disruptive tariffs on Canadian goods – in the worst case, a US-Canada trade war – and 2025 looks like a year of considerable economic uncertainty for Canada.
• The deepening G-Zero will undermine AI governance, with faltering regulation and disintegrating international cooperation increasing the risk of collateral damage from rapid technological advances. It will also exacerbate suffering in the most thinly governed and forgotten places on the planet where ongoing wars and humanitarian crises will continue to fester. In both cases, a lack of global leadership will eventually visit serious harm on states around the world, including Canada.

For more information and additional Canada-specific risks and takeaways, download the Implications For Canada addendum from Eurasia Group.

About the Report

Top Risks is Eurasia Group’s annual forecast of the political risks that are most likely to play out over the course of the year. This year’s report was published on 6 January 2025. For more information, click here.

About Eurasia Group

Eurasia Group is the world’s leading global political risk research and consulting firm. Since 1998, we have helped clients make informed business decisions in countries where understanding the political landscape is critical. Our research analysts are trained social scientists with post-graduate degrees, extensive professional experience, and a diverse range of language capabilities. Headquartered in New York, we also have offices in Washington, DC, San Francisco, London, São Paulo, and Singapore, as well as a vast network of experts around the world. For more information, please visit www.eurasiagroup.net.

SOURCE: Eurasia Group

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