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After France and Germany, Canada becomes the third large economy to be plunged into political turmoil just weeks before Donald Trump returns to the U.S. presidency. Finance Minister Chrystia Freeland’s shock resignation on Monday following her falling out with Justin Trudeau prompted calls for the prime minister himself to step down — including from his own Voices within the Liberal Party. It is unfortunate that at a time when U.S. allies must work together to deal with a destructive new president in the White House, three G7 democracies are experiencing a crisis of leadership. The timing is particularly bad for Canada. The crisis is driven in part by Trump’s threat to impose 25% tariffs on Canadian imports, which could severely damage the Canadian economy.
Freeland’s departure was triggered by Trudeau’s attempt to demote her on Friday, after he reportedly approached Mark Carney, the former governor of the Bank of Canada and the United Kingdom, to replace her. The finance minister and prime minister have been at loggerheads over the government’s plan to massively waive Canada’s goods and services tax and send C$250 ($175) checks to nearly half the country’s population. Critics denounce the measures as an attempt to buy votes for a government that is lagging badly in polls ahead of next October’s elections, at the expense of a soaring budget deficit.
Freeland’s scathing resignation letter cited a “costly political stunt” and insisted Canada must keep its “fiscal powder dry” ahead of a potential tariff war with Trump’s United States. The outgoing finance minister deserves credit for portraying herself as a guardian of fiscal responsibility, even if she cannot escape her association with the policies that have brought the cabinet to its knees.
The nine-year-old government is far from its former political glory, trailing right-leaning conservative leader Pier Pliyev by 20 percentage points. Like center-left parties elsewhere, the Trudeau government has struggled to address growing dissatisfaction with rising living and housing costs and immigration. The country, which has long welcomed newcomers, is beginning to chafe at the ambitious immigration targets that the Liberal-led government has relied on to boost flagging economic growth, opening the way for Pliyev, an anti-elite populist. It doesn’t help that a government once seen as embodying hopes for a resurgent liberalism in Western democracies is now viewed by many as sanctimonious Trudeau-esque.
Freeland’s withdrawal, on the day another capable minister said he would resign at the next election, suggests the prime minister has lost the government’s trust. Trudeau said he would consider his position over the holidays. Indeed, as long as he remains leader, his party’s decline is unlikely to be reversed. Trudeau may believe that given the relationships he built during the president’s first term, he is best equipped to deal with Trump’s threat to impose tariffs on nearly 80 per cent of Canada’s exports. But the returning American leader openly mocked him as the “governor” of “the great Canada.”
Trudeau should consider whether his continued leadership is in the best interests of the country. A new leader and a new plan might be able to limit the Liberals’ electoral losses and limit the Conservatives to a minority, forcing them to govern with partners and potentially limiting Canada’s shift to the populist right.
Canada’s crisis highlights how Trump’s return has upended the politics of U.S. allies even before he enters the White House. This again demonstrates the need for center-left and center-right parties to find better ways to counter a potential Trump rise elsewhere. Yet for Canada’s liberal standard-bearer, the best way to preserve his legacy is to hand it over to someone else.
