Canada’s finance minister Chrystia Freeland resigns

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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 on Friday told her he no longer wanted her to serve as finance minister and had offered her a different cabinet position. She said that in recent weeks the pair had been “at odds about the best path forward for Canada”.

She cited “costly political gimmicks” and differences with Trudeau about how the country should respond to the incoming Trump administration’s economic policies. In a letter posted on X, she called US president-elect Donald Trump’s threat to impose 25 per cent tariffs on Canadian imports “a grave challenge”.

She added that 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”.

Freeland’s departure could serve a significant blow to Trudeau’s government at a precarious time for the prime minister. She was due to announce the country’s economic outlook in an economic statement on Monday afternoon.

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 cheque for nearly half of 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. This was central to the dispute, as one of Freeland’s pledges was to keep government spending in check.

Trudeau has faced repeated calls to step down and trails badly in polls to the opposition leader Pierre Poilievre.

In October, Trudeau insisted he would stay on as leader of his minority government despite months of speculation over his leadership and an appeal from up to 40 MPs from his Liberal party to step down.

Pressure has grown on Trudeau to step down after the party lost two safe parliamentary seats in by-elections in June and September. In September, the leftwing New Democratic party also tore up a deal to support the Liberal minority government in confidence votes, raising the chance of a snap election well before the scheduled date of October 2025.

Canada’s economy has been struggling with rising unemployment and low growth. The impending return of Trump to the White House has also piled pressure on Trudeau, who travelled to the US president-elect’s Mar-a-Lago estate last month for a meeting. Trump has threatened to wield tariffs to protect the US’s economic and national security interests, including the 25 per cent tariffs on goods from Canada and Mexico.

As deputy PM Freeland had been the face of the Trudeau government’s preparation for Trump. But signs of the rift with the prime minister became apparent when Trudeau chose not to take Freeland to the Mar-a-Lago meeting.

Freeland was expected to make the much-delayed Fall Economic Statement on Monday and acknowledge a huge increase to the deficit due to the sales tax exemption. She was also expected to outline the spending to ramp up border security in response to Trump’s tariff threats and demands to bolster border protection.

Freeland was 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.

Speculation has resurfaced in local media this month that Trudeau wanted former Bank of England governor Mark Carney to replace Freeland. Some people close to Carney are sceptical that he would accept a political role with an uncertain future to join a government facing an upcoming election loss.

John Manley, a former finance minister in a Conservative government, said the rift between the PM and Freeland had become detrimental to Canada. “There can’t be a crack of light between a prime minister and the finance minister and here there was,” he said.

Carlo Dade, director of trade and trade infrastructure at the Canada West Foundation, a think-tank that focuses on Western Canada, said an election could be called after Christmas so Canada has a government with a voter 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,” he 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.

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