For more than nine years, Chrystia Freeland was the support and source of Canadian Prime Minister Justin Trudeau: since his government took office in 2015, she has been one of the most influential ministers in his cabinet, a loyal right-hand man in good and – more recently – bad times. As Minister of Finance and Deputy Prime Minister, she was considered an able and respected minister of all things.
On Monday, Freeland unexpectedly submitted her resignation after a conflict over financial policy and his intention to give her a different role – an abrupt blow to Trudeau, who has been struggling with plummeting popularity for some time. Her step, which she explained in a scathing public letterhas plunged his shaky government into chaos and may have hastened his own political downfall.
The split in the Trudeau cabinet, which governs with a parliamentary minority and is performing poorly in opinion polls, comes at an extremely precarious time: Canada is urgently considering how the country should respond to the threat from incoming US President Donald Trump to impose 25 percent tariffs on imports from Canada, one of the United States’ largest trading partners, after taking office in January. According to Trump, the neighboring country must do more to prevent the influx of migrants and drugs through the US northern border.
Border security
Trump’s plan threatens to plunge Canada’s economy, which sends more than three-quarters of its exports to the US, into recession. The federal government and provincial leaders are weighing their options, from more border security resources and a charm offensive toward U.S. allies to retaliatory tariffs and a freeze on crucial energy supplies.
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It is precisely against that background that Freeland, in her resignation letter, lashed out at budget measures that she would announce in an interim budget in parliament on Monday at the behest of Trudeau and his associates. The budget deficit rose by tens of billions of dollars, well beyond an upper limit that she herself set earlier this year, as it became apparent when it was submitted at the end of a confused day of crisis in Ottawa. Public Safety Secretary Dominic LeBlanc was also hastily appointed Treasury Secretary.
“Our country faces a major challenge,” said Freeland, who led negotiations on behalf of Canada during Trump’s first term to modernize the North American Free Trade Agreement (NAFTA) (the outcome was renamed USMCA in 2018). “That means we need to keep our financial powder dry now so that we have the reserves we may need for an upcoming tariff war.”
Freeland clashed with Trudeau over a temporary suspension of VAT on some consumer items and an unimplemented plan for 250 Canadian dollar (167 euro) checks to Canadians. Trudeau said these had to demonstrate that his government takes public concerns about the cost of living seriously. However, Freeland rejected them in her letter as “costly political gimmicks” that the country “can hardly afford” against the background of Trump’s threat.
Sinking ship
In addition, Trudeau wanted to remove her from her position after the budget she was due to present on Monday to make her a minister without a portfolio, with responsibility for relations between Canada and the US, it became clear on Monday. Trudeau has long been trying to recruit Mark Carney, former governor of the Canadian central bank and the British central bank, as finance minister in an effort to boost his government’s standing. However, Carney has not joined his cabinet, which is increasingly seen as a sinking ship – and did not emerge as a savior on Monday.
Freeland’s sharp criticism of her own government was gratefully quoted by opposition leader Pierre Poilievre of the Conservatives
The 56-year-old Freeland, a former financial journalist and author whom Trudeau brought in as his team’s first “star candidate” in 2013, saw resigning as the only “honest and viable path,” she wrote. She stated that she would remain as an MP, an indication that she could emerge as party leader if Trudeau himself comes under pressure from his group to leave. Despite continued rumblings and some painful defeats in by-elections for vacant parliamentary seats in recent months, that pressure has so far been limited.
That can now change. Freeland’s sharp criticism of her own government was gratefully quoted by opposition leader Pierre Poilievre of the Conservatives, who according to opinion polls would achieve a resounding victory in new elections. These must take place next fall at the latest. Poilievre, a young populist with Trumpian tendencies, called on two smaller opposition parties to support a vote of no confidence against Trudeau. They indicated that they would do so.
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However, that won’t be possible before parliament goes on Christmas recess this Tuesday – a fact that Trudeau used to buy time until early next year. He addressed his group on Monday evening, but did not respond publicly to Freeland’s resignation, apparently hoping he can survive. Trudeau sees the election of Trump and his threat about import duties as a crisis that may persuade Canadian voters to give him a new mandate, because he has shown during Trump’s first term that he can deal with the volatile president.
’51st state’
However, that seems unlikely. Admittedly, Trudeau scored at the end of last month when he, as the first G7 leader, was invited by Trump a dinner at his Mar-a-Lago estate in Florida. But since then, Trump, not a natural ally of the progressive prime minister, has taken to social media belittled as “governor” of a 51st state – a joke appreciated by few in Canada.
Meanwhile, calls for elections are growing. According to many, only in this way can Canada get a stable government with a strong mandate to negotiate with Trump. There is a good chance that they will arrive early next year. Alberta Premier Danielle Smith condemned the uncertainty caused by the rift at a crucial time. “It’s not the best time for a vacuum.”