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After France and Germany, Canada has become the third major economy to plunge into political turmoil weeks before Donald Trump’s return as US president. Finance Minister Chrystia Freeland’s shock resignation on Monday after falling out with Justin Trudeau has sparked calls for the prime minister himself to resign, including from within his own Liberal Party. It is unfortunate to have leadership crises in three G7 democracies just as America’s allies must work together to deal with a disruptive new president in the White House. For Canada, the timing is especially bad. The crisis was precipitated in part by Trump’s threat to impose 25 percent tariffs on Canadian imports, which could severely damage its economy.
The trigger of Freeland’s departure was Trudeau’s attempt to demote her last Friday, having supposedly courted Mark Carney, former central bank governor in Canada and the United Kingdom, to replace it. The Finance Minister and the Prime Minister had been at odds over the government’s plan for a broad exemption from Canada’s goods and services tax and a C$250 ($175) check for nearly half of the country’s population. Critics have criticized these measures as an effort to buy votes for a government that is trailing badly in polls ahead of elections scheduled for next October, at the cost of a growing budget deficit.
Freeland’s scathing resignation letter referred to “expensive political tricks,” insisting that Canada must keep its “fiscal powder” dry ahead of a potential tariff war with Trump’s United States. The outgoing Finance Minister commendably presented herself as the guardian of fiscal responsibility, although she cannot escape association with the policies that have brought down the cabinet.
The nine-year government has fallen far from its former political grace, falling 20 points behind right-wing conservative leader Pierre Poilievre. Like center-left parties elsewhere, Trudeau’s government has struggled to address discontent over skyrocketing living and housing costs and immigration. A country that had long welcomed newcomers began to chafe at the ambitious immigration targets the Liberal-led administration relied on to boost sluggish growth, paving the way for the anti-elite populist Poilievre. . A government once seen as the embodiment of hopes for a renewal of liberalism in Western democracies has not been helped by what many now see as Trudeau’s prudish style.
Freeland’s departure, the day when another competent minister said that retire for in the upcoming elections, suggests that the prime minister has lost the confidence of his government. Trudeau has said he will consider his position over the holidays. In reality, it is highly unlikely that his party’s decline will be reversed as long as he remains leader. Trudeau may believe he is in the best position to deal with the Trump threat of tariffs on about 80 per cent of Canada’s exports, given the relationship built during the president’s first term. But the returning American leader has been openly trolling him as “governor” of the “Great State of Canada.”
Trudeau should consider whether continuing his leadership is in the best interest of the country. A new leader and a new program could still limit the Liberals’ electoral losses and limit the Conservatives to a minority, forcing them to govern with partners and potentially limiting a Canadian tilt toward the populist right.
The crisis in Canada highlights how Trump’s return is already upending policy in America’s allies even before he is in the White House. It demonstrates once again the need for center-left and center-right parties to find better ways to counter the rise of Trump hopefuls elsewhere. For Canada’s liberal standard-bearer, however, the best way to safeguard his political legacy is to hand it over to someone else.