Canadian Prime Minister Mark Carney's Liberals will form government with a minority, according to Canadian public broadcaster CBC.
The party won Canada's federal election on Tuesday, but fell short of the 172 needed for majority control.
The Liberals had 169 confirmed seats with two races left to call in a setback for the party but a result that puts them in strong position to pass legislation, including measures to confront United States President Donald Trump.
Not having an outright majority means Mr Carney's party will have to seek help from another, smaller party in the nation's next parliament.
Elections Canada has processed nearly all the ballots, but there will be at least one mandatory recount and the result of that might not be known for days.
Mr Carney's rival, populist Conservative Party leader Pierre Poilievre, was leading in the election race until three months ago when the US president began a trade war with the country and threatened to annex it as the 51st American state.
The Conservatives had won at least 144 electoral districts as of Tuesday, but Mr Poilievre was voted out of the seat he held for 20 years.
"It was the 'anybody-but-Conservative' factor, it was the Trump-tariff factor, and then it was the [former PM Justin] Trudeau departure … which enabled a lot of left-of-centre voters and traditional Liberal voters to come back to the party," Shachi Kurl, president of the Angus Reid Institute polling firm, told Reuters.
The Liberals, who have been in power since November 2015, were 20 percentage points behind in surveys in January before the unpopular Mr Trudeau announced he was stepping down.
Carney says system of open global trade 'over'
The Globe and Mail newspaper, citing a senior Liberal official, said Mr Carney would name a cabinet and reconvene Canada's House of Commons within two weeks. Another priority will be the annual budget, which is usually presented in March or April.
Mr Carney, saying Mr Trump wanted to break Canada, had repeatedly vowed to open talks on new security and economic ties with the US president as soon as possible after the election.
"Our old relationship with the United States, a relationship based on steadily increasing integration, is over," he said in his victory speech in Ottawa on Tuesday.
"The system of open global trade anchored by the United States, … [which] has helped deliver prosperity for our country for decades, is over. These are tragedies, but it's also our new reality."
Mr Carney said the coming months would be challenging and require sacrifices. He has promised a tough approach to Washington's import tariffs and said Canada will need to spend billions to reduce its reliance on the US.
A political newcomer with a background in finance, Mr Carney had argued that his experience handling economic issues made him the best leader to deal with Mr Trump.
Mr Trump, in a social media post on Monday, reiterated his call for Canada to become the US's 51st state. However, on Tuesday he congratulated Mr Carney on his election win.
"President Trump congratulated Prime Minister Carney on his recent election," the Canadian prime minister's office said in a statement.
"The leaders agreed on the importance of Canada and the United States working together — as independent, sovereign nations."
The statement added that the "leaders agreed to meet in person in the near future".
ABC/wires
