Trudeau Government Teeters in Canada After Deputy Writes Shocking Resignation

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(Bloomberg) — Prime Minister Justin Trudeau’s administration was plunged into crisis when his trusted deputy, Finance Minister Chrystia Freeland, published a withering resignation letter Monday that left him vulnerable at the worst possible time.

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Trudeau and his cabinet have been struggling for weeks to show unity against Donald Trump’s threat to impose a 25% tariff on Canadian goods. The prime minister’s popularity, which has been declining for years, is close to its lowest point. The Prime Ministers of the states are sneaking up on him. Calls for him to step down – common among rivals – are growing stronger among members of his Liberal Party.

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All that was trouble enough for Trudeau. Freeland’s divisive gun, however, has brought Trudeau’s government as close as it has ever fallen, nine years after he entered office promising “sunny ways.”

Freeland, a journalist who has been finance minister since 2020, has been open about his opposition to the prime minister’s policy of spending short-term money on voter-pleasing measures such as tax breaks that increase the budget deficit. He suggested that these programs make the government look indifferent.

“Our country today faces a great challenge,” Freeland, 56, said in his resignation letter – referring to Trump’s threat of tariffs.

“That means keeping our powder dry today, so we have the funds we may need in the coming tax fight. That means avoiding expensive political tactics, which we can’t afford and which make Canadians doubt that we see the current crisis. ”

The timing of his letter may have been calculated to cause more damage. He posted it on social media site X at 9:07 a.m. in Ottawa, as the city’s political district prepares to see him deliver an update on the country’s financial and economic situation.

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Markets were bracing for bad news about the budget deficit. Freeland’s mistake only deepened doubts about Canada’s spending. The Canadian dollar fell immediately and bond yields jumped.

Trudeau, on the other hand, did not appear in public. He held a cabinet meeting with his ministers stunned, while government officials in a nearby building wondered what to do with copies of the statement Freeland was meant to deliver after the financial markets closed, around 4 p.m. Ottawa time.

Confusion reigned. Civil servants drew black cloths over the papers while many journalists left the briefing room. Trudeau skipped question period in the House of Commons and did not say anything publicly. Later, he appeared briefly on camera at the swearing-in ceremony of Dominic LeBlanc as Freeland’s successor.

LeBlanc is a veteran politician who is considered one of the safest hands in the cabinet. When Trudeau, 52, flew to Florida last month to meet Trump at his Mar-a-Lago resort, LeBlanc, who oversees border security, went with him.

Still, Freeland’s sudden exit is a political nightmare for Trudeau. It deprives a minister who was key to the government’s most successful efforts in 2018 to maintain close trade relations with the US, during Trump’s first term.

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“This is not about other members of the caucus who have a grudge. This is about a key player, a senior cabinet minister and formerly a very powerful colleague, who has publicly distanced himself from the current government’s policy,” said researcher Nik Nanos.

His departure will probably “speed up the election to the next vote of confidence,” he added. In other words, it increases the chances of elections in early 2025. Trudeau’s aides had hoped the government could survive until next October, buying time for voters’ anger over inflation and immigration to cool.

“This is actually an example of another G-7 country’s government on the brink because of a budget dispute,” Nanos said, referring to the political turmoil in France and Germany.

In the short term, the instability of Trudeau’s government undermines his ability to respond to anything Trump manages – a fact that some ministers seem to be aware of.

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

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Trudeau left that meeting without speaking to reporters, though he later arrived at a Liberal fundraiser. “It is the absolute privilege of my life to serve as your prime minister,” he told the audience – at this time.

Minister Outside the Door

Freeland’s resignation sparked long-standing tensions between his office and Trudeau’s. Freeland said he turned down an offer for another position from Trudeau on Friday. That job would include helping to manage Canada’s relationship with the US but would not include a government department to manage it, according to a government official who spoke on condition of anonymity.

Transport Minister Anita Anand pushed for Freeland’s departure, calling the former minister a “good friend” and adding that the news “affected me deeply, and I will withhold further comment until I have time to process it.”

The resignation of the finance minister would be difficult for him to recover from. In 2022, UK Chancellor Rishi Sunak stepped down, attacking Prime Minister Boris Johnson and triggering a series of ministerial resignations that toppled the leader despite his parliamentary majority.

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Even before Freeland shocked the country with his book, Trudeau’s power already seemed to be slipping. In September, the opposition New Democratic Party pulled out of a so-called “surrender and confidence” plan that helped the Liberals pass laws in the House of Commons, where they are the largest party but lack a majority of seats. As a result, the government is in danger of falling in any major vote.

Wilson Center researcher Xavier Delgado said NDP Leader Jagmeet Singh is facing a crisis. Polls show that his party will have “a poor showing when the election is held tomorrow.” But keeping Trudeau’s government alive “is too dangerous for him and his party to commit to the Liberals,” Delgado said.

Singh called on Monday for Trudeau to step down. So did Chad Collins, one of nearly two dozen Liberal MPs who signed a letter in October telling the prime minister it was time for him to step down.

Those developments underscore that, after Trudeau’s bad day, the rest of the week will not be easy. The prime minister invited the media to hear him speak at the caucus holiday event on Tuesday. It won’t be the holiday event you might have expected.

—Courtesy of Melissa Shin.

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