Canada's finance minister resigns as Prime Minister Trudeau deals with declining popularity

TORONTO — Canadian Finance Minister Chrystia Freeland, long Prime Minister Justin Trudeau's most powerful and loyal minister, announced Monday she was resigning from the Cabinet in a move that stunned the country and raised questions about how much longer the unpopular Trudeau can stay in his job.

Freeland, who was also deputy prime minister, said Trudeau had told her Friday that he no longer wanted her to serve as finance minister and that he offered her another role in the Cabinet.

But she said in her resignation letter to the prime minister that the only “honest and viable path” was to leave the Cabinet.

“For the past number of weeks, you and I have found ourselves at odds about the best path forward for Canada,” Freeland said.

Freeland and Trudeau disagreed about a two-month sales tax holiday and $250 Canadian (US$175) checks to Canadians that were recently announced.

Freeland said Canada is dealing with U.S. President-elect Donald Trump's threat to impose sweeping 25% tariffs and should eschew “costly political gimmicks" it can “ill afford.”

“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.”

The resignation comes as Freeland, who chaired a Cabinet committee on U.S. relations, was set to deliver the fall economic statement and likely announce border security measures designed to help Canada avoid Trump's tariff threat. The U.S. president-elect has threatened to impose a 25% tax on all products entering the U.S. from Canada and Mexico unless they stem the flow of migrants and drugs.

Trudeau has said he plans on leading the Liberal Party into the next election, but there are some party members who do not want him to run for a fourth term. It wasn’t immediately clear what Freeland's resignation from the Cabinet means for Trudeau’s immediate future.

"This news has hit me really hard,” a shocked Transport Minister Anita Anand said. She added she needed to digest it before commenting further.

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 major party in Parliament, as they don’t hold an outright majority themselves. If the opposition New Democrats pull support, an election can be held at any time.

Trudeau channeled the star power of his father in 2015, when he reasserted the country’s liberal identity after almost 10 years 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.

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. But how we deal with the threat our country faces will define us for a generation, and perhaps longer."

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 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 and not just because Freeland was the second most powerful official in government.

"Also because of how she resigned: by publishing a letter on social media that clearly criticizes the Prime Minister only hours before she was supposed to present the government’s fall economic statement,” Béland said.

“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.”