Canada’s Finance Minister Chrystia Freeland resigned on Monday following weeks of clashes with Prime Minister Justin Trudeau over government spending and the looming threat of U.S. tariffs. Freeland’s departure, just hours before presenting a crucial economic update, marks a significant blow to Trudeau’s embattled Liberal government.
In a sharp resignation letter, Freeland criticized Trudeau’s push for increased spending as “political gimmicks,” warning it would undermine Canada’s ability to confront the 25% import tariffs President-elect Donald Trump has threatened to impose. Freeland, who also served as deputy prime minister, said fiscal prudence was essential to prepare for a potential tariff war with Canada’s largest trading partner.
Her departure intensifies a growing crisis for Trudeau, whose minority Liberal government faces mounting pressure from opposition parties. New Democratic Party leader Jagmeet Singh called on Trudeau to resign, declaring, “He has to go.” Conservative leader Pierre Poilievre also condemned the “chaos” and “weakness” within Trudeau’s administration.
Freeland’s resignation coincides with growing economic challenges, as the upcoming fiscal update is expected to reveal a larger-than-anticipated budget deficit. The Canadian dollar briefly weakened, and bond yields rose in response to the news.
Freeland, 56, was a key architect of Canada’s response to Trump’s trade policies in 2017, playing a pivotal role in renegotiating the U.S.-Mexico-Canada Agreement (USMCA). Her exit comes amid broader cabinet turmoil, with Housing Minister Sean Fraser also resigning and several other ministers opting out of the next election.
Political analysts predict that Trudeau will face increasing internal dissent, but without a formal leadership removal mechanism, only a “full-blown caucus revolt” could force his exit. Potential successors include Mark Carney, former Bank of Canada governor and current economic adviser, though he would need to secure a parliamentary seat.
Freeland’s resignation highlights deep divisions within the Liberal government and raises questions about its stability ahead of the next federal election, due by late 2025.
