Trudeau government is reeling in Canada after deputy writes scathing resignation

(Bloomberg) — Prime Minister Justin Trudeau's government was plunged into crisis when his trusted deputy, Finance Minister Chrystia Freeland, published a scathing resignation letter on Monday that weakened him at the worst possible time.

Trudeau and his cabinet have been struggling for weeks to show a united front against Donald Trump's threat to impose 25% tariffs on Canadian goods. The prime minister's popularity, which has been declining for years, is at an all-time low. Provincial premiers are firing at him. Calls for his resignation – common among rivals – are growing louder among members of his own Liberal Party.

All that was hard enough for Trudeau. Freeland's parting shots, however, have brought Trudeau's government as close to collapse as possible, nine years after he came to power promising “sunny manners.”

Freeland, a former journalist who has been finance minister since 2020, has made public her opposition to the prime minister's push for short-term spending on voter-friendly measures such as tax breaks that widen the budget deficit. She suggested that such plans would give the government an unserious impression.

“Our country faces a serious challenge today,” Freeland, 56, said in her resignation letter – referring to Trump's tariff threat.

“That means we need to keep our budget powder dry today so we have the reserves we might need for an upcoming tariff war. That means we must avoid expensive political gimmicks that we cannot afford and that make Canadians doubt whether we understand the seriousness of the moment.”

The timing of her letter might as well have been calculated to cause maximum damage. She posted the message at 9:07 a.m. in Ottawa on social media site

The markets were prepared for bad news about budget deficits. Freeland's message has only increased doubts about Canada's budget buffers. The Canadian dollar immediately fell and bond yields rose.

Trudeau, meanwhile, remained out of the public eye. He held a cabinet meeting with his stunned ministers, while government officials in a nearby building wondered what to do with copies of the statement Freeland was ordered to issue after financial markets closed, around 4 p.m. Ottawa time.

There was confusion. Officials pulled black cloths over the documents as many reporters left the briefing room. Trudeau skipped Question Time in the House of Commons and said nothing in public. He later appeared briefly on camera during a ceremony to swear in Dominic LeBlanc as Freeland's replacement.

LeBlanc is an experienced politician who is considered one of the safest hands in the Cabinet. When Trudeau, 52, flew to Florida last month to meet Trump at his Mar-a-Lago resort, LeBlanc, who is in charge of border security, went with him.

Still, Freeland's abrupt departure is a political nightmare for Trudeau. It deprives him of a minister who was crucial to the administration's largely successful efforts in 2018 to maintain close trade ties with the US during Trump's first term.

“This isn't about a few grumpy caucus members. This is about an important player, a senior minister and previously a very strong ally, who turns around and publicly distances himself from the policies of the current government,” said pollster Nik Nanos.

Her departure “is likely to accelerate the election to the next possible confidence vote,” he added. In other words, it increases the likelihood of an election in early 2025. Trudeau's aides had hoped the government could survive until October next year, giving voters' anger over inflation and immigration time to cool.

“It's actually an example of another G-7 country's government teetering on the edge over a budget controversy,” Nanos said, referring to recent political unrest in France and Germany.

In the short term, the Trudeau government's instability is undermining its ability to respond to what Trump has in store — a fact that other ministers appear to be aware of.

“We know that President Trump will come into power on January 20,” Industry Minister François-Philippe Champagne told reporters after Liberal lawmakers met Monday evening. “We owe it to Canadians, we owe it to our families and our friends and everyone in Canada to be as prepared as possible.”

Trudeau left that meeting without speaking to reporters, although he later showed up at a Liberal fundraising event. “It is the absolute privilege of my life to serve as your Prime Minister,” he told the audience – in the present tense.

Minister without department

Freeland's resignation highlighted tensions between her office and Trudeau's that had been simmering for some time. Freeland said she rejected Trudeau's offer of an alternative post on Friday. That job would include helping manage the relationship between Canada and the U.S., but would not include a government department to lead, according to a government official who spoke on condition of anonymity.

Transport Minister Anita Anand has backed Freeland's departure, calling the ex-minister “a good friend” and adding that the news “has hit me very hard, and I will reserve further comment until I have time to to process it.”

The resignation of a finance minister can be difficult to recover from. In 2022, British Chancellor Rishi Sunak resigned, attacking Prime Minister Boris Johnson's behavior and triggering a cascade of ministerial departures that toppled the leader despite his large parliamentary majority.

Even before Freeland shocked the country with her letter, Trudeau's grip on power appeared to be waning. In September, the opposition New Democratic Party withdrew from a so-called “supply and confidence” arrangement that helped the Liberals pass laws in the House of Commons, where they are the largest party but do not have a majority of seats. As a result, the government risks falling in a major vote.

Wilson Center researcher Xavier Delgado said NDP Leader Jagmeet Singh faces a dilemma. Polls show his party would have a “dismal outcome if elections were held tomorrow.” But if he keeps the Trudeau government alive “he risks further tying himself and his party to the Liberals,” Delgado said.

Singh on Monday called on Trudeau to quit. So did Chad Collins, one of about 20 Liberal MPs who signed a letter in October telling the prime minister it was time to give up.

These developments underscore that, after Trudeau's terrible day, the rest of the week is unlikely to get any easier. The prime minister has invited the media to hear him speak at a caucus party on Tuesday. It won't be the festive occasion he might have hoped for.

–With help from Melissa Shin.

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