Canada’s finance minister resigns as unpopular Trudeau faces biggest test of his political career

“Our country is facing a grave challenge,” Freeland said in the letter. “That means keeping our fiscal powder dry today, so we have the reserves we may need for a coming tariff war.”

A Liberal party official said Freeland was offered a position as minister in charge of Canada-US relations without portfolio and without a department. The official, who spoke on condition of anonymity because they were not authorised to speak publicly on the matter, said the position would have been in name only and wouldn’t have come with any of the tools Freeland previously had when she negotiated trade with the United States.

The resignation comes as Freeland, who chaired a Cabinet committee on US relations, was set to deliver the fall economic statement and likely announce border security measures designed to help Canada avoid Trump’s tariffs.

The US president-elect has threatened to impose a 25 per cent tax on all products entering the US from Canada and Mexico unless they stem the numbers of migrants and drugs.

The statement shows a much larger deficit than expected for the fiscal year and more than a billion for border security

Trudeau has said that he plans on leading the Liberal Party into the next election, but some party members have said they don’t want him to run for a fourth term, and Freeland’s departure came as strong blow to Trudeau’s administration.

“This news has hit me really hard,” Transport Minister Anita Anand said, adding that she needed to digest the news before commenting further.

Trudeau named Dominic LeBlanc as his new finance minister. LeBlanc, a longtime ally and friend, was the public safety minister and went with Trudeau to have dinner with Trump at Mar-a-Lago recently.

Opposition Conservative leader Pierre Poilievre said that the government is losing control at the worst possible time.

“Justin Trudeau has lost control, but he’s hanging onto power,” Poilievre said. “All this chaos, all this division, all this weakness is happening as our largest neighbor and closest ally is imposing 25 per cent tariffs under a recently elected Trump with a strong mandate, a man who knows how to identify weakness.”

No Canadian prime minister in more than a century has won four straight terms.

The federal election has to be held before October. The Liberals must rely on the support of at least one other major party in Parliament, because they don’t hold an outright majority themselves. If the opposition New Democratic Party, or NDP, pulls support, an election can be held at any time.

“I’m calling on Justin Trudeau to resign. He has to go,” NDP leader Jagmeet Singh said.

Trudeau’s Liberal party needs the support of the NDP party to stay in power. Singh didn’t say if he would note no confidence in the government but said all options are on the table.

“Mr. Trudeau’s government is over,” Opposition Bloc Quebecois leader Yves-François Blanchet said. “He must acknowledge that and act accordingly. The departure of his most important ally, his finance minister, is the end of this government.”

Trudeau channeled the star power of his father in 2015, when he reasserted the country’s liberal identity after almost a decade of Conservative Party rule. But the son of late Prime Minister Pierre Trudeau is now in big trouble. Canadians have been frustrated by the rising cost of living and other issues like immigration increases following the country’s emergence from the COVID-19 pandemic.

“As a country we have to project strength,” Ontario Premier Doug Ford said. “It’s chaos right now up in Ottawa.”

Trudeau’s legacy includes opening the doors wide to immigration. He also legalised cannabis and brought in a carbon tax intended to fight climate change.

Freeland said in the resignation letter that Canadians “know when we are working for them, and they equally know when we are focused on ourselves. Inevitably, our time in government will come to an end.”

Freeland’s resignation comes as Trudeau has been trying to recruit Mark Carney to join his government. Carney is the former head of the Bank of England and Bank of Canada.

He was so well regarded after helping Canada dodge the worst of the global economic crisis that the U.K. named him the first foreigner to serve as governor of the Bank of England since it was founded in 1694.

Carney has long been interested in entering politics and becoming the leader of the Liberal Party. It wasn’t immediately clear if Carney has agreed to join Trudeau’s Cabinet.

“This is quite a bombshell,” said Nelson Wiseman, professor emeritus at the University of Toronto. “Freeland was not only finance minister but also deputy prime minister and, until a couple of years ago, was seen as Trudeau’s heir as Liberal leader and prime minister.”

Wiseman said that leaks from the prime minister’s office suggest that she was a poor communicator and made Freeland’s status questionable.

“There was talk about her becoming foreign minister again and that would have been a good fit for her, but the stab in the back from the prime minister’s office cast the die,” Wiseman said.

Daniel Béland, a political science professor at McGill University in Montreal, also called it a political earthquake.

“This is clearly a minority government on life support but, until now, the (opposition) NDP has rejected calls to pull the plug on it. It’s hard to know whether this resignation will force the NDP to rethink its strategy.”