U.S. President Barack Obama’s road to re-election may have been smoother than expected, but he won’t have much time to savour the victory.

Enormous challenges lie ahead in the president’s second term as he attempts to revive the U.S. economy and push forward his health-care reforms in spite of Washington’s partisan divide.

Despite some predictions of a very tight race on election day, Obama’s victory was clear relatively early Tuesday night, as he carried key battleground states and garnered the majority of the electoral college votes.

But he won just 50 per cent of the popular vote, suggesting that Americans were not as confident in his leadership as they were in 2008.

Voters also reinstated a divided Congress, allowing Democrats to keep control of the Senate, while reinstating the Republicans’ House majority. 

That means Washington will likely remain gridlocked on key issues, including austerity measures, stimulus spending, health care, immigration and taxation.

“By itself the recognition that we have common hopes and dreams won't end all the gridlock, or solve all our problems or substitute for the painstaking work of building consensus and making the difficult compromises needed to move this country forward," Obama said in his victory speech.

But he vowed to work with Republicans and “leaders of both parties” to address the country’s fiscal imbalance and restore a sense of security for an estimated 23 million unemployed and underemployed Americans.

The list of promises Obama wasn’t able to realize in his first term include more taxes for the wealthy, a federal deficit reduction and an overhaul of the U.S. immigration policy. Obama has already taken steps to halt the deportations of some young, undocumented immigrants, particularly those who entered the U.S. as children and are eager to study or work in America.

Obama must also tackle delicate foreign policy issues, including an escalating civil war in Syria and pressure from Israel to implement more decisive actions against Iran’s nuclear program.

“When a person gets another term, they’re working on their legacy as a leader and as a president. And so a lot of areas they’re going to move into in the second term are obviously in the public interest of the United States,” Gary Doer, Canada’s Ambassador to the U.S., told CTV’s Power Play on Wednesday.

“Many of these items: improving trade, improving the U.S. economy, having more self-reliance in North America on energy and energy efficiency, making the world safer by getting a resolution to the development of nuclear power, potentially, in Iran…are in our interest as well,” he added.

“Will all those issues be easy? No.”

David Jacobson, the U.S. Ambassador to Canada, said the Obama administration is also expected to focus on the trade relationship with their neighbours to the north. He noted that trade between the two countries has significantly increases over the last few years.

Meanwhile, the Republican Party will be doing some soul-searching after Tuesday’s defeat.

While women, Hispanics, African-Americans and young people voted for Obama in droves, older white men still made up the majority of challenger Mitt Romney’s support base.

"To be frank, we're a Mad Men party in a Modern Family world," Chuck Warren, a Salt Lake City Republican strategist, said in an email to clients on Wednesday.

Newt Gingrich, who was a candidate for the Republican Party presidential nomination, told CBS This Morning he was wrong in assuming that Romney could beat Obama by focusing on the lousy economy.

He also admitted that many Republicans "misunderstood what was happening in the country” and the party must work harder to attract the votes of Latinos and other ethnic groups.

"Unless we do that, we're going to be a minority party,” he said.

With files from The Canadian Press