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On Monday, Canada’s Finance Minister, Chrystia Freeland, stepped down, plunging Prime Minister Justin Trudeau’s minority government into further unrest as it battles dwindling public support.
Freeland, who also held the position of Deputy Prime Minister, revealed that Trudeau informed her last Friday of his decision to appoint her to a different cabinet post, preferring someone else to manage the nation’s finances. She mentioned that their relationship had become tense recently over their differing visions for Canada’s future.
Highlighting “expensive political stunts” and disagreements with Trudeau on reacting to the incoming Trump administration’s economic policies, Freeland emphasized in a letter shared on social media platform X that President-elect Donald Trump’s threat to slap 25% tariffs on Canadian goods posed a “grave challenge.”
She argued that to seriously counter this threat required caution in fiscal spending today to preserve resources for any potential tariff battles and to avoid unnecessary political expenditure.
Freeland’s resignation is a significant setback for Trudeau at a crucial moment. She was supposed to deliver the country’s economic outlook in a statement set for Monday afternoon.
The friction between Trudeau and Freeland had been intensifying since November, when the government announced a comprehensive exemption from the goods and services tax coupled with a C$250 payout to almost half the population.
Facing poor polling numbers, the government hoped this costly initiative would win back voter trust, but it clashed with Freeland’s commitment to fiscal restraint.
Trudeau is under mounting pressure to resign, trailing significantly behind opposition leader Pierre Poilievre in polls.
Last October, Trudeau defied months of leadership conjecture and internal Liberal party appeals by up to 40 MPs to step down, declaring his intention to remain at the helm of his minority government.
Calls for his resignation escalated following the Liberal party’s loss of two safe parliamentary seats in by-elections during June and September. Additionally, the New Democratic Party severed its support pact, which had sustained Trudeau’s government in crucial votes, increasing the likelihood of an early election before the planned October 2025 date.
Canada is wrestling with rising unemployment and stagnant growth. Meanwhile, the potential resurgence of Trump in the White House adds another layer of pressure on Trudeau. Last month, Trudeau visited Trump’s Mar-a-Lago estate, while tariffs, including substantial tariffs on Canadian and Mexican goods, loom as a possibility under Trump’s administration.
Freeland was the public face of the Trudeau administration’s strategy for dealing with Trump. However, the widening gap between her and Trudeau became evident when she was excluded from the Mar-a-Lago visit.
Freeland was anticipated to present the delayed Fall Economic Statement on Monday, expected to unveil a surge in the deficit stemming from the sales tax relief and detail plans for increased border security spending in response to Trump’s tariff and protectionist rhetoric.
Once a journalist for outlets like the Financial Times, Freeland entered Canadian politics in 2013 and held several key positions in Trudeau’s cabinet.
Recently, rumors have surfaced suggesting Trudeau is eyeing former Bank of England Governor Mark Carney as Freeland’s successor. Nonetheless, insiders believe Carney might be hesitant to assume a political role given its uncertain trajectory amidst a looming election threat.
John Manley, a former Conservative finance minister, remarked that the fallout between Trudeau and Freeland had adversely affected Canada. “A prime minister and their finance minister must be aligned, and here they clearly weren’t,” he noted.
Carlo Dade, who leads trade infrastructure efforts at Canada West Foundation, suggested an election might be scheduled post-Christmas to ensure a government with a public mandate can negotiate with Trump. “Trump’s attacks on Trudeau have been relentless. It’s time to move forward; there’s urgent work ahead,” he stated.
Ginny Roth, a partner at Crestview Strategy, a lobbying firm in Toronto, commented that Freeland’s exit signals dwindling confidence in Trudeau among senior ministers. “Canada’s economy stands at a crucial juncture, and with looming tariff threats from our biggest trade partner, there’s no justification for sustaining this government now,” she argued.
