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After France and Germany, Canada has become the third big economy to plunge into political turmoil weeks before Donald Trump’s return as US president. Finance minister Chrystia Freeland’s stunning resignation on Monday after falling out with Justin Trudeau has prompted calls for the prime minister himself to stand down — including from within his own Liberal party. Having leadership crises in three G7 democracies just when US allies must work together to deal with a new disruptive president in the White House is unfortunate. For Canada, the timing is especially poor. The crisis was precipitated in part by Trump’s threat of 25 per cent tariffs on Canadian imports, which could severely damage its economy.
The trigger for Freeland’s departure was Trudeau’s attempt to demote her last Friday, having reportedly courted Mark Carney, former central bank governor in Canada and the UK, to replace her. The finance minister and prime minister had been at loggerheads over the government’s plan for a wide-ranging exemption to Canada’s goods and services tax and a C$250 ($175) cheque for nearly half the country’s population. Critics have decried these steps as an effort to buy votes by a government trailing badly in the polls before elections due by next October, at the cost of a soaring budget deficit.
Freeland’s scathing resignation letter referred to “costly political gimmicks”, insisting Canada must keep its “fiscal powder dry” ahead of a potential tariff war with Trump’s US. The outgoing finance minister commendably presented herself as a guardian of fiscal responsibility, though she cannot escape association with the policies that have laid the cabinet low.
The nine-year-old government has fallen far from its onetime political grace, running 20 points behind right-leaning Conservative leader Pierre Poilievre. Like centre-left parties elsewhere, Trudeau’s government has struggled to address discontent over spiralling living and housing costs, and immigration. A country that was long welcoming to newcomers began to chafe at the ambitious immigration targets on which the Liberal-led administration relied to boost sluggish growth — opening the way for the anti-elite populist Poilievre. A government once seen as embodying hopes for a renewal of liberalism in western democracies has not been helped by what many now see as Trudeau’s sanctimonious style.
Freeland’s exit, on the day another capable minister said he would stand down at the next election, suggests the prime minister has lost his government’s trust. Trudeau has said he will consider his position over the holidays. In reality, his party’s decline is highly unlikely to be reversed while he remains leader. Trudeau may believe he is best-placed to deal with Trump’s threat of tariffs on close to 80 per cent of Canada’s exports, given the relationship he built up during the president’s first term. But the returning US leader has been openly trolling him as the “governor” of the “Great State of Canada”.
Trudeau should consider whether his continued leadership is in the country’s best interests. A new leader and fresh programme might yet be able to cap the Liberals’ election losses and limit the Conservatives to a minority — forcing them to govern with partners and potentially restraining a Canadian tilt to the populist right.
The crisis in Canada highlights how Trump’s return is already upturning politics in US allies even before he is inside the White House. It demonstrates once again the need for parties of the centre-left and centre-right to find better ways to counter the rise of would-be Trumps elsewhere. For Canada’s liberal standard bearer, however, the best way to safeguard his political legacy is to hand over to someone else.
