by Mish Shedlock, Mish Talk:
It’s the end of the line one way or another for Canadian Prime Minister Justin Trudeau. He won’t survive this.
Trudeau’s Top Lieutenant Resigns Over Differences on Trump
The Washington Post reports Trudeau’s Top Lieutenant Resigns Over Differences on Trump
Justin Trudeau’s chief lieutenant throughout his tenure as Canada’s prime minister resigned from his cabinet on Monday, citing differences over how to confront President-elect Donald Trump’s “America First” economic nationalism, threatened tariffs and a possible trade war.
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The abrupt resignation of Chrystia Freeland, who served the past four years as both finance minister and deputy prime minister, is the latest blow to the embattled Trudeau, whose popularity has nosedived over the past year. If federal elections were held today, polls project a wipeout for his Liberal Party.
In her resignation letter, posted on Freeland’s X account Monday morning, shortly before she was scheduled to deliver a fallfiscal and economicupdate to Parliament, Freeland said Trudeau told her that he no longer wanted her to serve as his finance minister and offered her another cabinet role.
“Upon reflection, I have concluded that the only honest and viable path is for me to resign from the Cabinet,” she said. “To be effective, a Minister must speak on behalf of the Prime Minister and with his full confidence. In making your decision, you made clear that I no longer credibly enjoy that confidence and possess the authority that comes with it.”
Freeland — a former journalist whom Trudeau named foreign minister in 2017 as part of a cabinet shuffle designed to prepare the government for the first Trump administration — said that for several weeks, she and Trudeau had been “at odds about the best path forward for Canada,” including on how best to respond to the “grave challenge” posed by the U.S. president-elect’s threatened tariffs of 25 percent on Canadian imports. Canada sends three-quarters of its exports to the United States, and economists project that such levies could plunge Canada into a recession.
“We need to take that threat extremely seriously,” Freeland said in her statement. “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 recognize the gravity of the moment.”
Several lawmakers on Monday appeared shocked by the resignation.
Freeland’s resignation injected fresh turmoil into Trudeau’s government. Several cabinet ministers have stepped down from their roles in recent weeks, saying that they do not plan to run in federal elections that must take place by next October. Housing Minister Sean Fraser also announced his resignation on Monday.
But few cabinet ministers have wielded as much influence or power in Trudeau’s government as Freeland, whom he entrusted with so many portfolios that commentators here nicknamed her the “Minister of Everything.” Some considered her Trudeau’s heir apparent.
She played a key role in the renegotiation of the North American Free Trade Agreement during the first Trump administration, drawing the ire of the then president — “we don’t like their representative very much,” Trump once said of her — but earning the respect of then-U.S. Trade Representative Robert E. Lighthizer.
Finance Minister Shocks Canada by Quitting
Bloomberg reports Finance Minister Shocks Canada by Quitting Amid Rift Over Fiscal Policy and Trump
Freeland has been the most powerful person serving under Trudeau for years and also held the title of deputy prime minister. After Donald Trump won the US presidential election, the prime minister appointed her to lead a cabinet group developing a strategy on how to respond to US policies.
She announced her exit in a social media post on Monday morning, saying in a letter to the prime minister that the two are “at odds about the best path forward for Canada.” She released it just hours before she was due to deliver a fiscal and economic update in parliament.
Trudeau has yet to name a replacement, but the Finance Department announced on Tuesday afternoon that the fiscal update would proceed. It was expected to be unveiled at approximately 4 p.m. Ottawa time, though it was not immediately clear who would introduce it in the House of Commons.
The Canadian dollar fell as low as C$1.4271 per US dollar, while bond yields jumped, taking the benchmark two-year note to 3.05% as of 11:58 a.m. Ottawa time. Conservative Leader Pierre Poilievre called for an election.
“This is a serious moment. It’s time for the government’s mandate to come to an end. This cannot go on,” Poilievre said.
The sudden departure of one of Trudeau’s most loyal ministers — someone who has held senior cabinet posts during the entire nine years of this government — is a staggering blow for a prime minister who has lost a number of senior officials in recent months. His Liberal Party is trailing the Conservative Party by about 20 points in recent public opinion polls, with an election due next year.
Freeland’s resignation letter talked about Trump’s “aggressive economic nationalism,” including his threat to impose 25% tariffs against goods from Canada and Mexico — a move that would be extremely harmful to Canada’s economy.
“Our country today faces a grave challenge,” Freeland wrote. “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 recognize the gravity of the moment.”
The phrase “political gimmicks” 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.
Canadian Polls
CTVNews reports Conservatives Still in Majority Territory
Nearly three weeks after the Liberals first announced their “tax break for all Canadians,” Pierre Poilievre’s Conservatives remain in comfortable majority territory, according to latest ballot tracking by Nanos Research. It shows the Conservatives at 42 per cent nationally, while the Liberals and the NDP are within the margin of error of each other at 23 per cent and 21 per cent, respectively.
