Canada's finance minister resigns as unpopular Trudeau faces biggest test of his political career

TORONTO (AP) — Canadian Prime Minister Justin Trudeau faced the biggest test of his political career after Finance Minister Chrystia Freeland, long one of his most powerful and loyal ministers, resigned from the Cabinet on Monday.

The stunning move raised questions about how much longer the prime minister of nearly 10 years — whose popularity has plummeted due to concerns about inflation and immigration — can stay on as his administration scrambles to deal with incoming U.S. President-elect Donald Trump.

“The Great State of Canada is stunned as the Finance Minister resigns, or was fired, from her position by Governor Justin Trudeau," Trump posted on Truth Social. “Her behavior was totally toxic, and not at all conducive to making deals which are good for the very unhappy citizens of Canada. She will not be missed!!!”

Trump previously trolled Trudeau by calling Canada a state. And during his first term in his office — when he renegotiated the free trade deal with Canada and Mexico — Trump said Freeland wasn't liked.

Trudeau swiftly named longtime ally and close friend Dominic LeBlanc, the public safety minister who recently joined him at dinner with Trump at Mar-a-Lago, to replace Freeland. Freeland did not make that trip.

After being sworn in, LeBlanc told reporters he and Trudeau are focused on the cost of living facing Canadians and on finding common ground with Trump on border security and economic issues.

"It's not been an easy day," Trudeau later told a room of party supporters. He called it one of his party's “toughest days" but he did not say what he planned to do.

Trudeau faces calls to resign

Jagmeet Singh, leader of the opposition New Democratic Party which Trudeau’s ruling Liberals have relied upon to stay in power, called for him to resign earlier Monday.

“He has to go,” NDP leader Singh said.

The main opposition Conservatives have not called for Trudeau’s resignation but demand an election.

But a no confidence vote in the government is not imminent with Parliament about to break for the holidays .

Freeland, who was also deputy prime minister, said Trudeau had told her on Friday he no longer wanted her to serve as finance minister and offered her another role in the Cabinet. But she said in her resignation letter that the only “honest and viable path” was to leave the Cabinet.

“For the past number of weeks, you and I have found ourselves at odds about the best path forward for Canada,” Freeland said.

Freeland warns against ‘costly political gimmicks’

Freeland and Trudeau disagreed about a two-month sales tax holiday and 250 Canadian dollar ($175) checks to Canadians that were recently announced. Freeland said Canada is dealing with Trump's threat to impose sweeping 25% tariffs and should eschew "costly political gimmicks" it can "ill afford."

“Our country is facing a grave challenge,” Freeland said in her letter. “That means keeping our fiscal powder dry today, so we have the reserves we may need for a coming tariff war.”

A Liberal party official said Freeland was offered a position as minister in charge of Canada-U.S. relations without portfolio and without a department. The official, who spoke on condition of anonymity because of not being authorized to speak publicly on the matter, said the position would have been in name only and wouldn't have come with any of the tools Freeland previously had when she negotiated the trade with the United States.

Freeland, who chaired a Cabinet committee on U.S. relations, had been set to deliver the fall economic statement and likely announce border security measures designed to help Canada avoid Trump's tariffs. Trump has threatened to impose a 25% tax on all products entering the U.S. from Canada and Mexico unless the neighbors stem the numbers of migrants and drugs.

The statement shows a much larger deficit than expected for the fiscal year and more than a billion for border security.

Can Trudeau survive?

Trudeau has said he plans on leading the Liberal Party into the next election, but many party members have said they don't want him to run for a fourth term, and Freeland's departure was a huge blow.

Trudeau met with his lawmakers on Monday evening. Later, most of them brushed past reporters, declining to say what was said in the meeting.

Liberal lawmaker Chad Collins said they were “not united."

"There’s still a number of our members that want a change in leadership. I’m one of them,” he said. “I think the only path forward for us is to choose a new leader.”

No Canadian prime minister in more than a century has won four straight terms.

The federal election has to be held before October. The Liberals must rely on the support of at least one other major party in Parliament, because they don’t hold an outright majority themselves. If NDP pulls support, an election can be held at any time.

Singh said all options are on the table.

Trudeau channeled his father's popularity

Trudeau channeled the star power of his father, late Prime Minister Pierre Trudeau, in 2015, when he reasserted the country’s liberal identity after almost a decade of Conservative Party rule.

But Canadians are now frustrated by the rising cost of living and other issues, including immigration increases following the country’s emergence from the COVID-19 pandemic.

Justin Trudeau’s legacy includes opening the doors wide to immigration. He also legalized cannabis and brought in a carbon tax intended to fight climate change.

Freeland also said in her letter that Canadians “know when we are working for them, and they equally know when we are focused on ourselves. Inevitably, our time in government will come to an end."

Trudeau tries to bring in another Cabinet member

Separately, Trudeau has been trying to recruit Mark Carney, the former head of the Bank of England and Bank of Canada, to join his government. Carney has long been interested in entering politics and becoming the leader of the Liberal Party. LeBlanc's appointment to finance suggests that won't happen.

Daniel Béland, a political science professor at McGill University in Montreal, called Freeland's resignation a political earthquake.

“This is clearly a minority government on life support but, until now, the (opposition) NDP has rejected calls to pull the plug on it," Béland said. "It’s hard to know whether this resignation will force the NDP to rethink its strategy.”