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.