One cannot overstate the political earthquake that has shaken up the dynamics of politics in both Canada and the United States in the past six months. Despite trailing in the polls against Kamala Harris, Donald Trump pulled off a strong victory with 312 electoral college votes. Since taking office, and rightly or wrongly, his DOGE initiatives and tariff initiatives are making a statement that he fundamentally wants to change how America does business.

In Canada, if you had told someone six months ago that the Liberal Party would win yet again, given the state of affairs domestically, with the economy, the affordability crisis, the housing shortage and a belief that the country was headed in the wrong direction, you would have been laughed off the stage.

Even three months ago, few in Canada were giving the Liberals any chance of re-election. So why did the Liberals win a fourth term in Canada? I believe it comes down to three reasons: the unpopular Justin Trudeau resigned as Liberal leader, Mark Carney replaced him, and Donald Trump ramped a bunch of absurd threats against Canada.

Andrew Coyne, political contributor to one of Canada’s national newspapers The Globe & Mail, stated that “the Conservative Party was the party of change in Canada, and it appears that they were caught flat footed by the series of seismic changes of the last few months of Mr. Trump turning his rhetorical and economic guns on Canada.

Canada ended up with a very odd election where the Conservative Party was running against the Liberals, and their record over the past 10 years, while the Liberals were running against Donald Trump.

What has transpired on U.S – Canada relations since President Trump took office, and his assault on Canadian sovereignty (the “51st State” comments) and his tariff initiative has put our relationship into unchartered territory. But it also scared a lot of Canadians, and the election became about which leader – Mark Carney for the Liberals, or Pierre Poilievre for the Conservatives, could best stand up to Donald Trump. The decision of a lot of the Canadian electorate was that it was Mark Carney.

Because of Donald Trump’s approach to Canada, the Liberals campaigned that the nation is in existential crisis and that Mark Carney was the best person to lead the nation through this crisis. There is the immediate issue of the tariffs, but it is yet to be determined how negative the impact on the Canadian economy will be. But nobody knows exactly what President Trump intends. At first Canadians laughed off the joke that Canada should become the 51st state but more took it seriously the more President Trump repeated it.

Whether or not President Trump could pull off some kind of annexation if he wanted to is not the issue, but Canadians took it as an assault on our sovereignty, and many came out to vote on this issue and this issue alone.

Leadership style also played a factor. Mark Carney has had a long-standing career as a banker and came across at times as an anti-politician, whereas Pierre Poilievre faced some criticism that his style was “too Trumpy” and would he really be in for the fight that was needed against President Trump to protect Canadian interests.

It should be noted though, that although the Conservatives didn’t win the election, it still is a third consecutive minority government for the Liberals. The Conservatives did very well in gaining their highest percentage of vote (42%) which is the highest since 1984. But what also did them in was all of the other smaller parties – the hard left New Democratic Party (NDP), the Quebec separatist party the Bloc Québécois and the environmental focused Green Party all their support collapsed  – with most of it moving to the Liberals as they were seen as the better defender of Canada.

Pre-campaign issues – such as the cost of living, housing and affordability and Canadian unity are still issues all Canadians will be looking at how the Liberals address them going forward. Many blame the Liberals and their policies for creating theses issues in the first place, but I am sure that they would rather be in government with a chance to address these issues than in opposition.

Why do Canadians take offense to the “51st State” comments? Americans are proud of their country, and Canadians also have a deep pride about Canada. When a dealer asked me about the Canadian reaction to the Trump administration’s comments on this (Both Secretary of State Marco Rubio and Press Secretary Karoline Leavitt have repeated the 51st State comments), I put it to him this way – some Canadians are wondering why the U.S. hasn’t become Canada’s 11th province yet. My U.S. friend quickly stated that that was absurd - but he then understood the point why Canadians would be offended by this.

So where do we go from here? Mark Carney has stated that he would talk to President Trump in the coming days to work on a new economic and security deal. The short-term problem is warding off the tariffs, and dealing with whatever President Trump comes up with. Canada is certainly playing defense in this scenario.

The long-term issue is more serious. Canada and the United States have been long-term friends, partners and allies, with a lot of economic harmonization (like our equipment industries). At this point Canadians don’t know if they can trust this relationship anymore. Even after President Trump is gone, he may be replaced with someone else who has similar views, ambitions and policies towards Canada. So a consensus is starting to build that Canada must head off into a different direction. Right now, 75% of Canada’s trade is with the United States and steps are being taken to diversify our trade with other countries. Canada also has to step up it’s military spending to meet its NATO commitments, so it will look at other alliances both in trade and defense.

I don’t think Canada is alone here – all democracies are looking towards the United States as it is no longer business as usual and to what extent it is or isn’t it a responsible and reliable ally.