New Delhi: Differences over how to deal with the next US president, Donald J. Trump, and fiscal “gimmicks” led one of the most important members of Canadian Prime Minister Justin Trudeau’s cabinet—Chrystia Freeland—to resign as the finance minister and deputy prime minister Monday.
“On Friday, you told me you no longer want me to serve as your Finance Minister and offered me another position in the Cabinet. Upon reflection, I have concluded that the only honest and viable path is for me to resign from the Cabinet,” said Freeland in her resignation letter posted on the social media platform X.
The former Canadian cabinet minister added: “For the past number of weeks, you and I have found ourselves at odds about the best path forward for Canada. Our country today faces a grave challenge. The incoming administration in the United States is pursuing a policy of aggressive economic nationalism, including a threat of 25 percent tariffs.”
See my letter to the Prime Minister below // Veuillez trouver ma lettre au Premier ministre ci-dessous pic.twitter.com/NMMMcXUh7A
— Chrystia Freeland (@cafreeland) December 16, 2024
Freeland, a former journalist, and Trudeau’s point person for the renegotiation of the North American Free Trade Agreement (NAFTA) during Trump’s first tenure as President, as well as the architect of Canada’s COVID-19 response, resigned hours before she had to provide an annual fiscal update to the Canadian Parliament.
The unexpected resignation of Freeland, long considered to be the most powerful minister in Trudeau’s cabinet, is a stinging rebuke of the incumbent Prime Minister’s leadership and a major setback to his grip on power within the Liberal Party.
Trudeau held a meeting of Liberal Party Monday evening, where he is said to have faced calls to resign from his own party members, according to media reports.
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Reasons for Freeland’s exit
In her resignation, Freeland added that the tariff threat by President-elect Trump needs to be taken “extremely seriously” and that it would mean keeping Canada’s “fiscal powder dry” at the moment to ensure reserves for the oncoming trade war with the US.
The major policy decisions between Freeland and Trudeau come over the prime minister’s decision to introduce a sales tax holiday for two months, which started earlier this week, and to send Canadians earning below C$1,05,000 modest cheques of C$250. Freeland referred to the two policies as “political gimmicks” that Ottawa can “ill-afford” with the threat of Trump’s 25 percent tariffs.
The policies by Trudeau come after horrendous polling numbers over the last year, which saw his Liberal Party trail the opposition Conservatives by almost 20 percentage points, according to some polls.
However, the policies add to the already ballooning deficit, which is shown to be around C$61.9 billion, which breaks Freeland’s promise of keeping it under C$40 billion.
Freeland’s importance
Born in Alberta, Freeland was one of Trudeau’s top recruits, when he took over as party leader of the Liberals in 2013. A former journalist, with family roots from Ukraine and an education in Russian history and literature at Harvard University, Freeland moved to Kyiv in 1988 as the Soviet Union was crumbling.
In 2013, Trudeau and his team convinced her to run in the Toronto seat held by the former interim leader of the Liberals, Bob Rae. In November 2015, when Trudeau’s Liberals swept to power in Ottawa, Freeland was made the minister of international trade as a part of his new look team.
In her early years, she worked together with Steve Verheul, Canada’s chief trade negotiator, to salvage the Comprehensive Economic and Trade Agreement with the European Union (EU) working with the Wallonians—a regional parliament in Belgium—to see the deal over the finishing line.
Her biggest test was the election of Trump in November 2016 to the White House in the US. Along with Katie Telford (Trudeau’s chief of staff) and Gerald Butts (former principal secretary), Freeland led the charge early on to build ties with Trump’s team, including Jared Kushner (the president-elect’s son-in-law) and Ivanka Trump (daughter), notes author Stephen Maher in the book The Prince: The Turbulent Reign of Justin Trudeau.
From meetings with Steve Bannon and Peter Navarro to becoming the Canadian foreign minister in 2017, Freeland became one of the most important members of “Team Canada” in the renegotiation of NAFTA with the US.
The successful renegotiation of NAFTA, including its hiccups—a 25 percent tariff on Canadian steel, which saw Ottawa respond with tariffs on everything from liquor in Kentucky to pickles from Wisconsin—to apply as much pressure on Trump’s constituents, eventually bore fruit.
In August 2020, Freeland became the first woman to become the finance minister of Canada, a post she held till Monday.
With the loss of Freeland, Trudeau loses an important member who knows Trump’s team and has been in negotiations with the president-elect once before. Furthermore, Freeland’s loss further weakens Trudeau within the Liberal Party, adding to the woes of a prime minister looking to lead the party into polls scheduled for 2025.
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