Canada’s finance minister resigns after clash with Prime Minister Trudeau, a blow to the government

Canada’s Finance Minister Chrystia Freeland resigned on Monday after clashing with Prime Minister Justin Trudeau over issues including dealing with U.S. tariffs, dealing a major blow to an already unpopular government.

In his scathing resignation letter, Freeland said Trudeau’s push for more spending is a political gimmick that could undermine Ottawa’s ability to deal with the 25 per cent import tariff that President-elect Donald Trump plans to impose. I dismissed it as such.

The resignation of Freeland, 56, who also served as deputy prime minister, is one of the biggest crises Trudeau has faced since taking power in November 2015. He will also lose a key ally, as he is expected to lose the next election. The official opposition party, the Conservative Party.

“The Canadian government itself is spiraling out of control,” Conservative Party Leader Pierre Poièvre told reporters, repeating his call for an immediate election.

“We cannot accept this kind of disruption, division and weakening as we look down on the weight of 25% tariffs from our largest trading partner. We cannot continue like this,” he told reporters. .

Freeland said he was resigning in the wake of last Friday’s meeting with Prime Minister Justin Trudeau, who had been at loggerheads for weeks over spending.

Liberal Party sources say Trudeau wants Freeland to become a minister in name only, without a portfolio that deals with Canada-U.S. relations, effectively a major demotion.

His resignation came hours before he was scheduled to submit his autumn economic report to Congress. The report was widely expected to show the minority Liberal government running a much larger budget deficit in 2023/24 than expected.

Officials said the document would be released as planned on Monday, but did not provide further details.

“This is likely to cause a leadership crisis within the Liberal caucus…(It) would be politically and personally devastating for Prime Minister Trudeau,” said Nick Nanos, founder of polling firm Nanos Research. It’s a thing,” he said.

The ruling Liberal Party, in power since November 2015, is on track to lose the elections, which must be held by late October 2025, according to opinion polls.

Freeland, a former journalist, took over the finance portfolio in August 2020 after serving as trade minister and foreign minister. As minister, she oversaw a major government spending campaign to address the fallout from the coronavirus.

His colleagues were clearly surprised.

An emotional Finance Committee chair Anita Anand said: “This news has come as a huge shock to me. I will refrain from commenting further until I have had time to process it.”

Prime Minister Trudeau has been under pressure for months from Liberal MPs alarmed by the party’s poor poll numbers, in part due to complaints about high prices.

But for now, he is safe because Canada’s political leaders are chosen by special convention.

“This is an absolute bombshell,” said Nelson Wiseman, a political science professor at the University of Toronto. “I think the problem the Liberals have is that they don’t have a mechanism to remove Trudeau. Only a full-fledged caucus revolt could do that.”

Prime Minister Trudeau’s minority government needs support from other MPs to stay in power, but has so far been held in power by the left-leaning New Democratic Party.

In a statement reacting to Freeland’s resignation, party leader Jagmeet Singh did not say whether he would continue to support Trudeau.

Canada’s 10-year bond yield rose to its highest level since November 28th. It last rose 4.2 basis points to 3.2%. The Canadian dollar fell to a 4-1/2-year low of $1.4268 to the US dollar, before reversing.

Freeland and Trudeau clashed over the government’s proposals for temporary tax cuts and other spending measures, according to domestic media reports.

“In recent weeks, you and I have found ourselves at odds over the best path forward for Canada,” Freeland said in a letter to Trudeau published in X.

Freeland said the threat of new U.S. tariffs is a serious threat.

“It means keeping today’s fiscal fireworks dry, and it means securing the reserves that might be needed for a tariff battle. It means avoiding expensive political gimmicks. , but we cannot afford that,” she wrote.

When Trump took office in 2017, he vowed to scrap the trilateral free trade agreement with Canada and Mexico. Freeland helped renegotiate the agreement and played a major role in saving Canada’s economy, which was highly dependent on the United States.

While tensions between prime ministers are not uncommon (Trudeau’s first finance minister resigned in 2020 over a spat over spending), the level of vitriol in Freeland’s letter is even by Canadian standards. It was remarkable.

“On Friday you said you no longer wanted me to serve as Minister of Finance and offered me another post in the cabinet… You said that I no longer enjoy that trust and the powers that come with it I made it clear that I don’t have one,” Freeland said.

“After much consideration, I have concluded that resigning from the Cabinet is the only honest and viable path forward.”

Mr Freeland resigned on the same day that Housing Minister Sean Fraser announced he was stepping down for family reasons. A further six ministers have either resigned or announced that they will not stand in the next election.

Before entering politics in 2013, he worked as a journalist and in senior editorial positions at media companies including the Financial Times, Globe and Mail, and Reuters News from 2010 to 2013.

One candidate to replace him could be former Bank of Canada Governor Mark Carney, who already serves as Prime Minister Trudeau’s economic adviser. However, Mr. Carney is not a member of Congress, and is traditionally required to run for an elected seat in the House.