Mark Carney, the former central banker who oversaw the response to financial crises in North America and the UK, will become the next prime minister of Canada after winning the race to lead the country’s federal Liberal party.

Carney, 59, takes on the role as Canada is locked in a potentially catastrophic trade war with the US, long its closest ally and largest trading partner. Earlier in the week, Donald Trump announced a 25% tax on all Canadian goods, with a carveout for the automotive and energy sectors. The tariffs have the power to push Canada’s fragile economy in a recession.

Justin Trudeau on the day members of Canada’s Liberal party gather to choose his successor, in Ottawa, Ontario on 9 March. Photograph: Blair Gable/Reuters

“America is not Canada. And Canada never, ever, will be part of America in any way, shape or form,” Carney told supporters, laying bare the existential crisis that has outraged Canadians, riven the longstanding relationship with the US, and promises to be the overarching theme in his tenure as prime minister.

Carney said that while Canada had not asked for the fight: “We will win.”

Ahead of the announcement, the outgoing prime minister, Justin Trudeau, electrified the crowd by telling Liberals he was “damn proud” of his government’s legacy.

But he warned of dangerous time for the country. “This is a nation-defining moment. Democracy is not a given. Freedom is not a given. Even Canada is not a given,” he told supporters.

He also drew on the “elbows up” rallying cry to intense applause – a phrase from ice hockey legend Gordie Howe popularised in recent weeks after threats from Trump to annex Canada.

It is unclear when Carney, who was governor of the Bank of Canada from 2008 to 2013 and governor of the Bank of England from 2013 to 2020, will assume office. Trudeau and the new Liberal leader are expected to hold conversations in the coming days to determine the outgoing prime minister’s final day in office.

With 85.9% of the vote, Carney beat the former finance minister Chrystia Freeland, the former government house leader Karina Gould and the former member of parliament Frank Baylis.

Carney has followed an unusual path to power: he will be only the second prime minister in Canadian history without a seat in the House of Commons. While no rule bars this, convention suggests Carney will need to quickly announce plans to run for a federal seat.

He will also be the first Liberal prime minister from western Canada, a valuable political identity in a country fixated on geography.

Carney spent much of his campaign pitching himself as an outsider, despite years-long ties to the Liberal party, including serving as an economic adviser to Trudeau, the outgoing prime minister.

His definitive victory, foreshadowed by fundraising success and a spate of key endorsements from senior cabinet members with vast organising networks, could energise the incumbent Liberals.

In recent weeks, the party has reversed its political freefall, sharply rebounding to such a degree that a previously expected Conservative majority in the next general election looks increasingly unlikely.

The shift in the polls has been so dramatic that pollsters have struggled to find any historical precedent.

In a leaked memo, the leftwing federal New Democratic party recently warned its members Carney would probably call a snap election within days of winning the leadership race, capitalising on his rising popularity and depriving the opposition parties the rich political optics of bringing down the Liberal government through a vote of non-confidence to force an election.

The move in the polls is, in part, explained by repeated threats by Trump to annex Canada. In polling, Carney is widely viewed as the most trusted federal leader to navigate the current trade crisis because of his extensive economic background.

“My government will keep the tariffs on until the Americans show us respect,” said Carney.

Carney also attacked the Conservative leader, Pierre Poilievre, the current frontrunner if an election were held soon, calling him a “career politician” who was running a deeply divisive campaign. “Division doesn’t win in a tariff war,” Carney said.

But in recent weeks, several fumbles have underlined the challenges in moving from the corporate world to politics.

Carney has waffled over his role at the investment firm Brookfield Asset Management, when it moved its headquarters from Toronto to New York – a politically sensitive issue given recent pressure from the US on businesses to uproot and move south.

His attempts to clarify the issue prompted the Globe and Mail’s editorial board to praise him as a “fast learner in the art of prevarication and hairsplitting”.

He has promised to put his substantial assets, believed to be valued at more than C$30m (£16m), into a blind trust immediately.

Speaking before the new leader was announced, former prime minister Jean Chrétien said Trump had united Canadians “like never before” and jokingly called on him to receive the country’s highest honours as thanks.

“From one old guy to another old guy. Stop this nonsense. Canada will never join the United States,” he said to raucous cheers.

“No one will starve us into submission because Canada is and will remain the best country in the world. Vive le Canada!”