Trudeau Government Teeters in Canada After Deputy Writes a Scathing Resignation

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(Bloomberg) — Prime Minister Justin Trudeau’s administration was thrown into crisis when his trusted deputy, Finance Minister Chrystia Freeland, published her resignation letter on Monday, leaving him vulnerable at the worst possible time.

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Trudeau and his government have been struggling for weeks to present 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 near an all-time low. Regional premiers are sniping at him. Calls for his resignation – which are common among his rivals – are rising from members of his Liberal Party.

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All of that was enough of a problem for Trudeau. However, Freeland’s parting shots have brought Trudeau’s government closer to collapse, nine years after he took office promising “sunny roads.”

Freeland, a former journalist who has been finance minister since 2020, has publicly declared her opposition to the prime minister’s push for short-term spending on voter-pleasing measures such as tax breaks that increase the budget deficit. She suggested that such plans make the government look not serious.

Freeland, 56, said in her resignation letter: “Today our country faces a serious challenge,” referring to Trump’s threat of tariffs.

“That means keeping our fiscal powder dry today, so we have the reserves we might need for the next tariff war. It means avoiding costly political tricks, which we can’t afford, and which make Canadians doubt that we understand the gravity of the moment.”

Her message was probably timed to cause maximum damage. She posted it on the social media site

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Markets braced for bad news about the budget deficit. Freeland’s official letter simply deepened doubts about Canada’s financial reserves. The Canadian dollar immediately fell and bond yields jumped.

Meanwhile, Trudeau has remained out of public view. He held a Cabinet meeting with his stunned ministers, while government officials in a nearby building wondered what to do with advance copies of the statement Freeland was supposed to deliver after the financial markets closed, around 4 p.m. Ottawa time.

There was confusion. Civil servants painted black clothes on documents while several reporters left the press conference room. Trudeau skipped question period in the House of Commons and said nothing publicly. Later, he appeared briefly on camera at a ceremony swearing in Dominique LeBlanc as Freeland’s replacement.

LeBlanc is a veteran politician and considered one of the safest husbands in the Cabinet. When Trudeau, 52, traveled to Florida last month to meet with Trump at his Mar-a-Lago resort, LeBlanc, the border security official, went with him.

However, Freeland’s abrupt exit represents a political nightmare for Trudeau. It deprives him of a minister who was crucial to the government’s successful efforts in 2018 to maintain close trade relations with the United States, during Trump’s first term.

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“This is not about some angry caucus members. This is about a key player, a senior government minister who was previously a very powerful ally, who has turned around and publicly distanced himself from current government policy,” said Nick Nanos, a pollster.

He added that her departure may “accelerate the pace of elections for the next possible vote of confidence.” In other words, it boosts the odds of an election in early 2025. Trudeau’s aides had hoped the government could stay on until next October, buying time to calm voter anger over inflation and immigration.

“It’s actually an example of another G7 country’s government teetering on the brink over the budget controversy,” Nanos said, referring to recent political unrest in France and Germany.

In the short term, the Trudeau government’s instability undermines its ability to respond to whatever Trump has in store – a fact that other ministers seem to recognize.

“We know that President Trump will take office on January 20,” Industry Minister François-Philippe Champagne told reporters after a meeting of Liberal lawmakers on Monday evening. “We owe it to Canadians, our families, our friends and everyone in Canada, to be better prepared.”

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

A minister without a ministry

Freeland’s resignation brought into the open tensions between her office and Trudeau’s that had been simmering for some time. Freeland said she rejected Trudeau’s replacement position offer on Friday. That job would have included helping manage the relationship between Canada and the United States, but would not have included a government department to manage it, according to a government official who spoke on condition of anonymity.

Transport Minister Anita Anand encouraged Freeland’s departure, calling the former minister a “good friend” and adding that the news “hit me deeply, and I will reserve further comments until I have time to process them.”

It may be difficult to recover from the resignation of the Finance Minister. In 2022, UK Chancellor Rishi Sunak resigned, attacking Prime Minister Boris Johnson’s behavior and leading to a series of ministerial resignations that ousted the leader despite his large parliamentary majority.

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Even before Freeland shocked the country with her message, Trudeau’s grip on power already appeared to be slipping. In September, the opposition New Democratic Party withdrew from the 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 is at risk of falling in any major vote.

NDP Leader Jagmeet Singh faces a dilemma, said Xavier Delgado, a researcher at the Wilson Center. Opinion polls indicate that his party’s performance would be poor if elections were held tomorrow. Delgado said keeping Trudeau’s government alive “risks associating himself and his party with the Liberals even further.”

On Monday, Singh called on Trudeau to resign. So did Chad Collins, one of about two dozen Liberal MPs who signed a letter in October telling the prime minister it was time to surrender.

These developments confirm that after Trudeau’s terrible day, the rest of the week is unlikely to get any easier. The Prime Minister invited the media to listen to him speak at a party event on Tuesday. It wouldn’t be the celebratory occasion he had hoped for.

– With help from Melissa Shin.

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