While the Americans were distracted with the Confederacy, the French, led by Emperor Napoleon III, hatched a plan to gain a new foothold in the Americas. Mexican president Benito Juarez refused to pay the interest and debts it owed to Europe, and Napoleon led a coalition including Britain and Spain to force Mexico to pay. At first, the plan went smoothly, with combined forces landing at Mexican ports and routing the disorganized and inferior Mexican army. However, Britain and Spain learned France to take over Mexico as a whole, resulting in Britain and Spain dropping out of the coalition. The French persisted and captured Mexico City, with Juarez fleeing to the countryside. France abolished Mexico's republic, creating the Empire of Mexico. Hoping to repair relations with Austria, France installed Maximilian of House Hasburg-Lorraine as the new emperor.
Maximilian did his best to improve the living situation of the average Mexican, using French loans and investments to initiate reforms and help the peasants. Juarez continued to lead resistance in the countryside, resulting a full-blown rebellion against Maximilian, supported by the liberals and conservatives angered by the emperor's reforms. With the aid of French troops and minor Austrian support, Juarez was captured in 1866 and executed. Maximilian was loved by the smallfolk, and offered amnesty to all rebels that would lay down their arms. With the backing of the poor, moderate Conservatives, the clergy, and France and Austria, Maximilian's reign was secure as hundreds laid down their arms. Maximilian was coronated in Mexico City in 1868, becoming His Imperial Majesty Don Maximiliano I Maximilian I, By the Grace of God and will of the people, Emperor of Mexico.. Both French mobles and Austrians arrived at his coronation, and there was good feelings between the two nations.
The French's foothold began to worry Great Britain. In response, the United Kingdom increased its ties to the Confederacy. The Confederacy, which was once seen as a defense against American aggression against Britain's Canadian colonies, was now needed to also defend against the growing power of France and Mexico. Britain also consolidated its power in its North America by uniting its major colonies. The Confederate of Canada, lead by John McDonald, was founded in 1864, and by 1870 grew to encompass Oregon and the rest of the Canadian colonies. The Dominion of Canada, with its capital of the bustling city of Winnipeg, now stood as a united defense against any American or Mexican territorial expansion.