Why Canada’s deputy PM Chrystia Freeland stepped down

Canada’s Deputy Prime Minister Chrystia Freeland abruptly resigned, citing policy differences with Prime Minister Justin Trudeau over how to deal with US tariff threats. Freeland, who is also finance minister, stressed the need for fiscal prudence against potential trade wars, appearing to criticize Trudeau’s recent tax policies. Her departure just hours before a scheduled fiscal update raises questions about Trudeau’s leadership and the country’s economic direction.

Canada’s Deputy Prime Minister and Finance Minister Chrystia Freeland resigned on Monday after a disagreement with Prime Minister Justin Trudeau over tariff threats from US President-elect Donald Trump. Freeland, who also left her role as finance minister, became the first cabinet member to openly voice her disagreement with Trudeau. As the first woman to serve as Canada’s finance minister, Freeland was seen as a potential successor to Trudeau.

Why did Canada’s Deputy Prime Minister Chrystia Freeland resign?

In her formal resignation letter to Trudeau, Freeland addressed Trump’s proposed 25 per cent import tariffs on Canadian goods, saying “our country faces a serious challenge today.”

She said the country should take Trump’s tariff threats “extremely seriously.” Warning they could turn into a “tariff war” with the United States, she urged Ottawa to keep its “fiscal powder dry.”

“The incoming administration in the United States is pursuing a policy of aggressive economic nationalism, including the threat of a 25 per cent tariff. We need to take that threat extremely seriously. That means keeping our fiscal powder dry today, so that we have the reserves we need for the tariff war to come.”

“That means avoiding costly political maneuverings that we cannot afford,” she said, criticizing a recent sales tax holiday that opponents argued was costly and aimed at boosting the ruling Liberals’ dwindling political support.

The 56-year-old deputy prime minister’s resignation came just hours before she was scheduled to give an update on the country’s finances, amid reports that the government is on track to exceed its deficit projections from last spring.

Freeland’s resignation letter further stated: “On Friday, you told me that you no longer wanted me to be your finance minister and offered me another position in Cabinet. After consideration, I have concluded that the only honest and viable path forward is for me to resign from Cabinet.”

“Over the past few weeks, you and I have found ourselves disagreeing about the best path forward for Canada,” she said.

“To be effective, a minister must speak on behalf of the prime minister and with his or her full confidence. In making your decision, you made clear that I no longer enjoy that confidence and that I no longer have the authority that comes with it.”