Big blow to Justin Trudeau as Canadian deputy PM Chrystia Freeland quits abruptly

“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,” Bloomberg quoted Freeland’s resignation letter.

“Our country today faces a grave challenge. We need to take that threat extremely seriously. That means keeping our fiscal powder dry today, so we have the reserves we may need for a coming tariff war. That means eschewing costly political gimmicks, which we can ill afford and which make Canadians doubt that we recognise the gravity of the moment,” she added.

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Freeland quit due to differences over Trump

According to the Bloomberg report, Freeland left the cabinet due to differences over how to prepare for the incoming Donald Trump administration in neighbouring United States.

She is said to have been the point person in developing a strategy on how to counter Trump’s threat to impose 25% tariffs. The sudden departure is indeed a big blow to Trudeau, who is reportedly battling declining popularity ahead of general elections.

According to the Bloomberg report, Freeland announced her resignation just hours before she was due to deliver a fiscal and economic update in parliament. It’s not yet clear whether that document will still be released. The Canadian dollar fell and bond yields jumped.

The loonie fell as low as C$1.4271 per US dollar, its lowest intraday level since April 2020.

The “political gimmicks” comment in Freeland’s resignation letter is likely a reference to the government’s announcement last month that it plans to implement a two-month sales-tax holiday on certain items, such as toys and Christmas trees, and send C$250 checks to millions of Canadians.

The tax holiday came into force on December 14 but so far the government doesn’t appear to have the votes necessary to pass the rebate checks.

Freeland got the job in 2020 after the prime minister had a falling out with then-finance minister Bill Morneau over issues such as spending on Covid-related income support programmes.

(With Bloomberg inputs)