OTTAWA — Prime Minister Justin Trudeau tapped his top fixer in cabinet, Dominic LeBlanc, to replace Finance Minister Chrystia Freeland after she suddenly tendered her resignation from cabinet Monday morning in a fight over the nation's finances.
Freeland said she had to step down from cabinet because the prime minister lost faith in her after she fought back against decisions that ballooned the deficit far past what she previously pledged.
"It's obviously been an eventful day and it has not been an easy day," Trudeau told supporters at a Liberal party fundraiser in Gatineau, Que., late Monday evening, hours after he replaced Freeland.
He snapped photos with party faithful at the posh holiday donor party, but avoided speaking with reporters all day about losing his most important minister on the day she was to update Parliament on the state of the nation's finances and defend the government's spending decisions.
A Liberal source said there's always a healthy tension between the two offices over spending, but the real turning point for their relationship came after Donald Trump's election last month.
The Liberal source said Trump's 25 per cent tariff threat on Nov. 25 was "a really big moment" for Freeland, who insisted that Canada needs to exercise fiscal restraint and prudence in the face of a threat that could easily turn into a "COVID-level crisis" to the economy.
That dispute came to a head with a call between Trudeau and Freeland on Friday, when Trudeau revealed he planned to demote her from her top post in cabinet. While he planned to have her take the lead on Canada-U.S. relations, her new role would come without a department to back her, depriving her of real authority on the file, the source said.
Her departure from Trudeau's front bench reignited calls for the prime minister to step down and call an election, though no such vote is imminent with MPs poised to break soon for the holidays.
Trudeau moved to swiftly fill the position, having LeBlanc sworn in as finance minister at a ceremony at Rideau Hall late on Monday, while the Liberal caucus met halfway across town following a tumultuous day for the party.
“We understand that cost of living for a huge, huge number of Canadians is a very significant issue and they expect their government to be focused on affordability issues,” LeBlanc said.
LeBlanc, a loyal and reliable soldier in the ranks of the Trudeau government, will lead the Canada-U.S. cabinet committee, formerly Freeland’s job following her deep involvement in Canada's response to the last Trump White House.
In her resignation letter, Freeland said she and Trudeau found themselves at odds for weeks about "the best path forward for Canada" and that the country faces a "grave challenge" with the incoming Trump administration.
"We need to take that threat extremely seriously. That means keeping our fiscal powder dry, so we have the reserves we may need for a coming tariff war. That means eschewing costly political gimmicks, which we can ill afford and which make Canadians doubt that we recognize the gravity of the moment."
The president-elect himself weighed in on social media.
"The Great State of Canada is stunned as the Finance Minister resigns, or was fired, from her position by Governor Justin Trudeau," Trump said on Truth Social, referencing comments he made during a recent dinner with the prime minister in Florida in which he suggested he might make Canada the 51st state.
Trump added that Freeland's behaviour 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," he said.
Conservative Leader Pierre Poilievre charged that Freeland's resignation proves Trudeau has lost his grip.
"The government of Canada itself is spiralling out of control, right before our eyes, and at the very worst time," he told reporters on Parliament Hill.
Poilievre said it's up to NDP Leader Jagmeet Singh, whose caucus has supported the minority Liberals in key confidence votes throughout the fall, to force an election.
Singh called on Trudeau to step down as Liberal leader, saying the Liberals are "fighting themselves instead of fighting for Canadians."
He said "all options are on the table," yet refused to say if he is finally ready to bring down the minority government.
Singh's New Democrats voted with the Liberals to defeat Conservative non-confidence motions in the House of Commons three times this fall.
Bloc Québécois Leader Yves-François Blanchet said the prime minister should call an election early in the new year centred around who is best positioned to take on the Trump administration.
"Mr. Trudeau's government is over. He must acknowledge that and act accordingly,” Blanchet said.
Liberal MPs convened a special caucus meeting late Monday.
MP Chad Collins, who signed a letter in October with 23 of his Liberal colleagues calling on Trudeau to step down, said after the gathering that he and an unspecified number of MPs still believe the prime minister must leave.
"We're not united; there's still a number of our members who feel we need a change in leadership. I'm one of those," he told reporters, adding that the "only path forward for us is to choose a new leader and to present a new plan to Canadians with a different vision" than that of the Conservatives.
Earlier on Monday, a senior government official not authorized to speak publicly told The Canadian Press that the prime minister does not intend to resign, but all other options are being considered, including proroguing Parliament.
Freeland's resignation came just as she was to deliver the fall economic statement, which revealed a deficit of $61.9 billion that blew past the fiscal guardrail she set of $40 billion for the year.
Her criticism that the government is engaging in political gimmicks comes on the heels of a decision to grant consumers a temporary GST holiday.
Neither Freeland nor Trudeau were in the House of Commons for question period Monday, and Poilievre made sure to needle the government for not having a finance minister for most of Monday.
"I have a question for the finance minister," he said, looking across to Freeland's empty seat. "Who are you?"
Freeland's bombshell reveal landed just as Housing Minister Sean Fraser was holding his own news conference to announce he will not seek re-election, citing a need to be closer to his family.
Fraser is seen internally as a good communicator and a top performer in cabinet, and his name was floated at times in speculation about who could replace Trudeau.
Cabinet ministers were terse reacting to the news but the few who spoke to reporters expressed confidence in the prime minister and said they will stand by the fiscal update.
Treasury Board President Anita Anand said outside the cabinet room that Freeland is a good friend to her and that "this news has hit me really hard."
Labour Minister Steven MacKinnon said he regrets Freeland's departure, but the government "remains very strong with a number of very capable ministers and the prime minister.”
Trudeau's Liberals have trailed behind Poilievre's Conservative party for more than a year now as an affordability crisis grips the nation.
That's put the Trudeau government consistently on the ropes and on track to lose power in the next election, which must happen before next October, unless something changes to improve his party's fortunes.
Rumours of a cabinet shuffle have swirled in Ottawa since several cabinet ministers announced they will not run in the next campaign, and speculation grew as two others left their roles either due to scandal or to seek office elsewhere.
This report by The Canadian Press was first published Dec. 16, 2024.
Kyle Duggan, The Canadian Press
