Canada’s finance minister Chrystia Freeland resigned on Monday, creating fresh turmoil for Prime Minister Justin Trudeau and his minority government as they struggle to reverse their waning popularity.
Freeland, who is also Canada’s deputy prime minister, said Trudeau had sought to move her to a different cabinet position, adding that she and the Liberal leader had been “at odds about the best path forward” for the country following Donald Trump’s election in the US.
In a letter posted on X, Freeland cited disagreements with Trudeau about how Canada should respond to Trump’s “aggressive economic nationalism”, saying the country should push back against the president-elect’s “America first” ideology.
Trump’s threat to impose 25 per cent tariffs on Canadian imports was “a grave challenge” to the country, Freeland said.
To “take that threat extremely seriously” meant “keeping our fiscal powder dry today, so we have the reserves we may need for a coming tariff war” as well as “eschewing costly political gimmicks”, she added.
Freeland’s departure could be a significant blow to Trudeau’s government at a precarious time for the prime minister. She had been scheduled to announce the country’s economic outlook in a statement on Monday afternoon.
Sean Fraser, another Trudeau cabinet minister and ally of Freeland, also said on Monday that he would not be seeking re-election to parliament. Later on Monday, Dominic LeBlanc, a veteran Liberal cabinet minister, was sworn in as Freeland’s replacement.
Tensions between Trudeau and Freeland had been growing since the government in November announced a wide-ranging exemption to the goods and services tax and a C$250 ($175) cheque for nearly half the country’s population.
The government, trailing badly in the polls, was hoping to regain voter confidence with the policy that would cost billions of dollars. Freeland had repeatedly pledged to keep government spending in check.
Trudeau has faced mounting calls to step down and is trailing in the polls behind the Conservative opposition leader Pierre Poilievre.
Poilievre told reporters in Ottawa on Monday the Trudeau government was “out of control” and it was time for an election. “All this chaos and division, all these weaknesses are emerging”, with a potential trade war looming, he said.
Jagmeet Singh, leader of the leftwing New Democratic party, said on Monday: “I am calling on Justin Trudeau to resign. He has to go.”
In October, Trudeau insisted he would remain at the helm of his minority government despite months of speculation over his leadership and an appeal from up to 40 of his Liberal party MPs to step down.
Trudeau’s party lost two safe parliamentary seats in by-elections in June and September, when the NDP also tore up a deal to support the minority government in confidence votes, raising the chance of a snap election well before the scheduled date of October 2025. Singh did not say on Monday whether his party would withdraw support for the government. “All options are on the table,” he said.
Canada’s economy has been struggling with rising unemployment and low growth. Trump’s impending return to the White House has also piled pressure on Trudeau, who reacted to the incoming US leader’s latest tariff threat by travelling to his Mar-a-Lago estate last month for a meeting.
Trump shocked Ottawa last month by threatening a 25 per cent tariff on the country’s exports to the US, Canada’s biggest market and buyer of almost all its foreign oil sales.
Signs of the rift between Trudeau and Freeland were visible when the prime minister chose not to take Freeland to his Mar-a-Lago meeting with Trump.
Freeland was expected to make the much-delayed Fall Economic Statement on Monday and acknowledge a huge increase to the deficit — from a forecast C$40bn to C$62bn — due to the sales tax exemption. She was also expected to outline new border security spending in response to Trump’s demand that Canada bolster its border with the US.
Freeland had worked as a journalist at outlets including the Financial Times before winning a seat in Canada’s parliament in 2013. She has held several posts in Trudeau’s government.
Canadian media has speculated recently that Trudeau wanted former Bank of England governor Mark Carney to replace Freeland. Some people close to Carney are sceptical that he would join a government facing an upcoming election defeat.
John Manley, a former Liberal finance minister, said the rift between the PM and Freeland was hurting Canada. “There can’t be a crack of light between a prime minister and the finance minister and here there was.”
Carlo Dade, director of trade and trade infrastructure at the Canada West Foundation, a think-tank, said a snap election could be called after Christmas to give the country a government with a mandate to deal with Trump.
“Trump has been bashing Trudeau. Let’s get it over with now, there’s a lot of work to do,” Dade said.
Ginny Roth, a partner at Crestview Strategy, a lobbyist firm in Toronto, said Freeland’s exit was a sign of the shrinking confidence for Trudeau among his most senior ministers.
“Canada’s economy is on the brink, and we need to negotiate with our biggest trading partner as they threaten huge tariffs. There’s no excuse for propping up the government now,” she said.
This story has been amended to state that John Manley is a former Liberal finance minister, not Conservative.
