In an unexpected setback to an already unpopular government, Canadian Finance Minister Chrystia Freeland resigned on Monday after arguing with Prime Minister Justin Trudeau about potential US tariffs.
After weeks of disagreements over spending, Freeland announced her resignation following a meeting with Trudeau last Friday, during which he asked her to accept a lower-level position.
Dominic LeBlanc, a member of Trudeau’s inner circle, immediately became the minority Liberal government’s finance minister.
One of the most significant crises Trudeau has encountered since assuming office in November 2015 is the resignation of Freeland, 56, who was also deputy prime minister. It also deprives him of a crucial ally, given the expectation of losing the next election to the official opposition Conservatives.
Trudeau wanted Freeland to serve as a minister without a portfolio that dealt with Canada-US relations in name only, according to a liberal source. This would be a significant demotion.
Legislators refused to comment on Trudeau’s meeting with the national Liberal caucus, which included Freeland, later on Monday.
Although he did not provide specifics, Labour Minister Steven MacKinnon stated that the conversation had been open and honest. Later, Trudeau said that being prime minister was the greatest honor of his life at a Liberal Party fundraiser in Ottawa.
“Clearly, today has been quite eventful. “This day hasn’t been easy,” he remarked.
When a leading figure in the opposition New Democrats, who have been supporting the Liberals in power, stated that the party would vote to remove Trudeau from office next year unless he resigned, it highlighted the possible threat to his future.
Peter Julian, the leader of the NDP in the House of Commons, told the Canadian Broadcasting Corporation, “That’s one of the tools that we have if we’re coming up to a straight-up non-confidence motion at the end of February, early March.”
He said, “we simply cannot continue like this,” and expected Trudeau to resign by then.
When questioned about overthrowing Trudeau, party leader Jagmeet Singh had previously been less ambiguous and insisted that he step down.
Just hours before her scheduled fall economic update to parliament, Freeland resigned. According to the report, the minority Liberal government’s 2023–2024 budget deficit was C$61.9 billion, significantly more than anticipated.
If the opposition parties unite against Trudeau on a vote of no confidence, they could overthrow him even though it won’t be possible until next year.
Will the Prime Minister continue to serve? Jonathan Malloy, a professor of political science at Carleton University in Ottawa, stated, “I believe he will, but he’s definitely been seriously threatened… it could be that this is the event that will push him over the edge.”
Parliament will not reconvene until January 27 after taking a Christmas break on Tuesday.
Freeland and Trudeau reportedly disagreed over a government proposal for short-term tax breaks and other spending measures, according to domestic media reports.
Freeland wrote a letter to Trudeau on X, saying, “You and I have been at odds over the best path forward for Canada for the last number of weeks.”
According to Freeland, there is a serious risk of new US tariffs.
To maintain the necessary reserves for a potential tariff war, we must maintain our fiscal stability today. That entails avoiding expensive political ploys, which we cannot afford,” she wrote.
The leader of the Conservative Party, Pierre Poilievre, asserted that the government was out of control.
He told reporters, “We cannot accept this kind of chaos, division, and weakness while we’re facing a 25% tariff from our biggest trading partner.”
“CRISIS IN LEADERSHIP”
“This will probably lead to a leadership crisis within the Liberal caucus… (it) is devastating for Trudeau on both a personal and political level,” stated Nik Nanos, the founder of the polling company Nanos Research.
The election must take place by late October 2025, and polls indicate the Liberals will lose badly.
Prior to taking over the finance portfolio in August 2020, Freeland held the positions of trade minister and foreign minister. In her capacity as minister, she was in charge of the enormous government spending initiative to repair the harm caused by COVID.
For months, Liberal lawmakers have been putting pressure on Trudeau after the party lost two safe parliamentary seats in special elections and saw low polling numbers, partly as a result of dissatisfaction with high prices.
The party will compete in another special election in British Columbia later on Monday.
“BOMBSHELL” CHOICE
Nelson Wiseman, a professor of political science at the University of Toronto, said, “This is quite a bombshell.” I believe that the Liberals’ inability to get rid of Trudeau is their main issue. Only a full-scale caucus revolt could accomplish that.
The yield on Canada’s 10-year note, CA10YT=RR, increased to its highest level since November 28. The yield on Canada’s 10-year note, CA10YT=RR, was most recently up 4.2 basis points to 3.2%. Before turning around, the Canadian dollar dropped to its lowest level in four and a half years, at 1.4268 to the US dollar.
Trump promised to destroy the trilateral free trade agreement with Canada and Mexico as soon as he took office in 2017. Freeland was instrumental in renegotiating the agreement and preserving Canada’s highly dependent U.S. economy.
The amount of invective in Freeland’s letter was exceptional by Canadian standards, despite the fact that conflicts between prime ministers and finance ministers are common—Trudeau’s first finance minister resigned in 2020 over a disagreement over spending.
On the same day that Housing Minister Sean Fraser announced his resignation due to family matters, Freeland departed. Six more ministers have resigned or declared they will not be seeking reelection in the upcoming election.
Freeland worked as a journalist and in senior editorial positions for a number of media outlets before going into politics in 2013. These included Reuters, where she worked from 2010 to 2013; the Financial Times; and the Globe and Mail.
