In a seriously ill-timed decision, Canadian Prime Minister Justin Trudeau’s move to shuffle Chrystia Freeland out of her role as Finance Minister has invited yet more controversy for his beleaguered government. Freeland, who has held the roles of Deputy Prime Minister and Finance Minister, resigned from the cabinet just hours before she was due to deliver the critical fall economic statement. This announcement, which was expected to address concerns about the looming threat of tariffs from former U.S. President Donald Trump, has sparked yet another political firestorm for Trudeau.
In a letter posted to social media, Freeland disclosed that Trudeau had asked her to step down as Finance Minister, with the promise of reassigning her to a different ministry. Instead, Freeland chose to resign outright, although she will continue to serve as a Liberal Member of Parliament (MP). While some political commentators have suggested that Freeland may have lost Trudeau’s confidence, they were unanimous in their belief that the manner in which the move was executed was clumsy and politically damaging.
There are two primary reasons for the dramatic resignation, as well as an underlying factor that remains unspoken.
Politics vs economy
The first and most obvious reason for the political fallout stems from the Trudeau government’s poor handling of the Canadian economy over the past two years. With the next federal election fast approaching, the government has resorted to populist measures, such as the GST holiday, which aims to alleviate some financial pressures on Canadians. The GST holiday, which began on December 14, will see the government waive the Goods and Services Tax on certain essential goods until February 2025. In addition, the government has announced C$250 cheques that will be distributed to all working Canadians to help with the rising cost of living.
In her letter, Freeland made a pointed reference to these initiatives, describing them as “costly political gimmicks.” The GST holiday, in particular, is expected to cost the federal government C$1.46 billion, with provinces that have the Harmonized Sales Tax (HST) losing an additional C$1.26 billion. Despite Freeland’s dismissive tone, many political analysts view these measures not as mere populism but as necessary political expedients, intended to demonstrate to Canadians that the government understands their financial struggles.
However, Freeland’s belief was that these measures would only further drain government finances, particularly with the looming tariff threat from Trump. She believed it was vital to maintain fiscal reserves to prepare for a possible trade war with the U.S.
The Trump tariff threat
The second key factor behind Freeland’s resignation is her opposition to the government’s handling of the escalating tariff war with the U.S. Freeland warned that the threat from Trump needed to be taken “extremely seriously” and that Canada needed to “keep our fiscal powder dry” to prepare for what could be a damaging trade conflict. The Canadian government has been exploring ways to respond to Trump’s 25% tariff threat, with strategic retaliatory tariffs on American goods being one option. Freeland, however, saw the government’s recent populist measures as weakening Canada’s financial position at a time when fiscal strength was needed most.
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Internal wrangling among liberals
Finally, the unstated reason for Freeland’s resignation involves the growing internal tensions within the Liberal Party. Sources close to the Prime Minister’s office suggest that relations between Trudeau and Freeland had become increasingly strained over the past year. Speculation has been rife that Freeland may have been positioning herself as a potential replacement for Trudeau, particularly as pressure mounted on the Prime Minister to step down ahead of the upcoming election. Trudeau, however, was reportedly sceptical of Freeland’s loyalty, especially as her policies on economic matters were seen as out of touch with ordinary Canadians.
Freeland’s resignation marks a low point for Trudeau’s government, which is already grappling with internal divisions and mounting political pressures. Housing Minister Sean Fraser also resigned, citing similar reasons for stepping down, and media reports suggest that a cabinet reshuffle could be imminent.
Opposition reaction
The opposition parties have wasted no time in capitalising on the situation. Conservative leader Pierre Poilievre has accused Trudeau of losing control of his government, while New Democratic Party (NDP) leader Jagmeet Singh has condemned both the Liberals and Conservatives for their failure to address the concerns of ordinary Canadians. Singh’s statement claimed that the resignation of Freeland, Trudeau’s closest ally, highlighted the deep divisions within the Liberal government and its failure to address the “urgent challenges” faced by the Canadian public.
While Freeland’s departure is a major political blow to Trudeau, it remains to be seen whether the Prime Minister can maintain his grip on power. As the government’s minority status in Parliament grows increasingly precarious, the fate of Trudeau’s administration now depends largely on the support of the NDP and Bloc Québécois.
Freeland’s resignation, combined with the growing dissatisfaction within the ranks of the Liberal Party, further damages Trudeau’s credibility ahead of next year’s federal election. The political instability caused by this latest scandal has undoubtedly left Canadians questioning whether the Trudeau government can weather the storm or whether it is on the verge of collapse.
