Toward the end of a most tumultuous week for the governing federal Liberals, Prime Minister Justin Trudeau told 2,000 plus attendees at the annual Holiday season party Tuesday evening that “like most families, sometimes we have fights around the holidays. But of course, like most families, we find our way through it.” For Ottawa watchers, the jury is out on whether the Prime Minister can or will want to continue to “find his way through it,” especially given this week’s most public political divorce between him and the Deputy Prime Minister and Finance Minister, Chrystia Freeland. Moreover, this fall has seen a growing list of Cabinet ministers either resigning, announcing their intention not to re-offer at the next election, or being rumoured to be leaving his cabinet. As such, today’s major cabinet shuffle could no longer be put off. This note discusses the impact of this week’s news on the Canadian approach to the Trump administration 2.0.
Alex Steinhouse of the GR&PL group provides additional context below.
The Resignation That Shocked Ottawa
On Monday, Chrystia Freeland shocked Ottawa, hours before she was to read her Fall Economic Statement with a devastating resignation letter to the Prime Minister. Ms. Freeland asserted that in the past few weeks, she and the Prime Minister were “at odds about the best path forward for Canada,” in the face of the “grave challenge” Canada is facing from the “incoming administration in the United States…pursuing a policy of aggressive economic nationalism, including a threat of 25% tariffs” President-Elect Trump Threatens 25% Tariffs on Canadian Goods: Key Questions & Answers | Knowledge | Fasken.
For Ms. Freeland, the federal government should be “keeping our fiscal powder dry today, so we have the reserves we may need for a coming tariff war,” as well as “pushing back against 'America First' economic nationalism with a determined effort to fight for capital and investment and the jobs they bring.” The Government of Canada needs to be “working in good faith and humility with the premiers of the provinces and territories of our great and diverse country and building a true ‘Team Canada’ response.” Her resignation followed reporting that Prime Minister Trudeau had told her last Friday by Zoom that she was to be replaced by Mark Carney as Finance Minister, and moved to a new role overseeing Canada-US relations, albeit with no ministry or budget under her purview, unlike normal cabinet positions. Mark Carney ultimately did not join Mr. Trudeau’s cabinet.
During the first Trump administration, Chrystia Freeland was a critical part of “Team Canada” —both for her ability to unite disparate Canadian voices across political and regional spectrums, as well as for her ability to negotiate with our American neighbours. While President-Elect Trump has repeatedly made clear his considerable dislike of Chrystia Freeland, given her network, skills and track record on this file, her departure from cabinet has a significant impact on the “Team Canada” makeup and strategy. There is no word thus far on who will replace Chrystia Freeland as Chair of the Cabinet Committee on Canada-US Relations.
New Finance Minister
In place of Ms. Freeland, the Prime Minister wasted little time in selecting her successor. Dominic Leblanc, a veteran politician who is known to be very close personally to the Prime Minister, was quickly sworn in as Finance Minister on Monday. Today’s shuffle has unburdened Mr. Leblanc of his Public Safety and Democratic Institutions portfolios, but he will retain Intergovernmental Affairs. Minister Leblanc enjoys strong relationships with the Premiers. He has also said the Prime Minister wants him to remain the government’s lead on border security issues, as well as on dealing with the United States on tariff talks. To that end, Leblanc will build on the relationships he has already made while on his trip to Mar a Lago with the Prime Minister, including with Mr. Trump’s pick for Commerce Secretary, Howard Lutnick, who is destined to lead the administration’s trade and tariffs strategy. On a podcast this week, Mr. Leblanc said he would be speaking with him next week to continue that conversation.
Meanwhile, Mr. Leblanc has said that he will be travelling to meet Mr. Trump's border czar, Tom Homan, after Christmas to present Canada's proposed $1.3 billion plan to secure the shared border. Mr. Leblanc had an initial preliminary call with Mr. Homan about the spending package, which was well received by his American counterpart. The plan includes supplying the RCMP with helicopters, drones and mobile surveillance towers, expanding legislative powers to strengthen law enforcement’s efforts, including under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, and creating a new joint "strike force" to work with the US on sharing intelligence to disrupt the flow of fentanyl. Mr. Leblanc is also reminding American officials that Canada is worried about illegal firearms coming into Canada from their country, and that “100%” of the cocaine and crystal meth in Canada are illegal drugs that come into Canada entirely from the US.
Other New Cabinet Positions Implicating Canada-US Relations
In today’s Cabinet shuffle, Prime Minister Trudeau named eight new ministers and moved four other Ministers to new portfolios. While most of the members of the Cabinet Committee on Canada-US Relations retain their Ministerial roles, notable changes relating to Canada-US relations include the following:
- Minister Anita Anand becomes the permanent Minister of Transport and gains the portfolio of “Internal Trade,” which will focus on how interprovincial trade can help in the face of the incoming Trump administration.
- Minister Petitpas-Taylor becomes Treasury Board President.
- David J. McGuinty becomes Minister of Public Safety and will need to work closely with Min. Leblanc and Min. Miller on our shared border.
- Minister of Crown-Indigenous Relations, Gary Anandasangaree, also becomes the Minister of Northern Affairs and Minister responsible for the Canadian Northern Economic Development Agency, and so will play a critical role on Northern defence spending.
- Darren Fisher becomes Minister of Veterans Affairs and Associate Minister of National Defence.
- Rachel Bendayan becomes Associate Minister of Public Safety and Minister of Official Languages.
- Ruby Sahota becomes Minister of Democratic Institutions and Minister responsible for the Federal Economic Development Agency for Southern Ontario.
This update will track in the weeks ahead how these changes impact the machinery of government relating to the Canada-US relationship.
What is the Opposition in Ottawa Saying About the Future of This Government?
Minutes before the Prime Minister’s Cabinet shuffle this morning, NDP leader Jagmeet Singh announced via statement that the NDP will, at the next opportunity once the House of Commons returns on January 27, 2025, “vote to bring this government down, and give Canadians a chance to vote for a government who will work for them. No matter who is leading the Liberal Party, this government’s time is up.” This follows a week in which the NDP leadership continued to hedge on their position as to whether to continue to support Prime Minister Trudeau.
The Conservatives and Bloc Québécois continue to call for a vote on non-confidence in the Trudeau government. Conservative Leader, Pierre Poilievre, says this shuffle makes no difference, as all Liberals are the same – what Canada needs is an election. Furthermore, Mr. Poilievre has now announced that he has written a letter to the Governor General “confirming that the Prime Minister has lost the confidence of the House and that Parliament must be recalled to hold a vote before the end of the year on triggering an Axe The Tax election.”
What Has Mr. Trump Been Saying About Canada?
Mr. Trump’s transition team has already been taking a victory lap on the changes Canada has proposed for the border: "President Trump is making good on his mandate for sweeping change," said a press release from his transition team Wednesday, headlined, "President Trump Is Securing The Border And He Hasn't Even Taken Office Yet." However, whether this week’s announcement is sufficient to avert tariffs is unclear to Republican congressional allies of Mr. Trump: "I dunno," Congressman Andy Biggs said, when asked by the CBC. "You're asking me to read the mind of President Trump. I will say that I support him, and he's doing a masterful job." No other Republican colleagues nearby had the answer either, when they were asked. But Mr. Trump has also continued his “joking” social media posts about Canada, saying once more it would be "a great idea" to make it America's "51st state": "No one can answer why we subsidize Canada to the tune of over $100,000,000 a year? Makes no sense!" "Many Canadians want Canada to become the 51st State. They would save massively on taxes and military protection. I think it is a great idea. 51st State!!!"
In response, former deputy prime minister and Québec premier Jean Charest fired back at Trump's post, calling it a "wake-up call." "Every Canadian, regardless of their opinion of the Prime Minister or political affiliation, should feel deeply offended by President Trump's remarks," Charest wrote. "For too long, we have been complacent in our relationships with the United States and the rest of the world. We need to unite and rise to this historic occasion to shape the future of Canada."
Ontario Premier Doug Ford said Canada will “never be the 51st state," rebuking U.S. President-elect Donald Trump’s latest social media post. “We’re Canada. We’re proud to be Canadians. We’ll always fight for that,” Mr. Ford said.
What Are the Provinces Saying This Week on Tariffs?
Mr. Ford has said the province would be using “every tool in its toolbox,” hinting that Ontario is prepared to cut off electricity that is powering millions of homes in New York, Michigan, and Minnesota – but only as a “last resort.” The Ontario government has also threatened to restrict the LCBO from buying American-made alcohol, stop the export of critical minerals, and cut the U.S. out of the provincial procurement process.
Premier Ford has been increasingly asserting a leadership position in negotiations with Americans, both in Canadian and American media markets, ahead of a rumoured early Ontario election call in the new year. But Premier Ford’s statements have not been well received by other Premiers, who had met earlier in the week in Toronto at the meeting of provincial and territorial Premiers. This includes Alberta Premier Danielle Smith, who is urging him to “walk back” the energy threat. Premier Smith has rejected the idea of using oil and gas exports as a bargaining chip to avoid tariffs. Québec and Newfoundland and Labrador Premiers François Legault and Andrew Furey have said similar things about risking their energy exports to the US.
What Can We Expect Next?
All eyes are on the Prime Minister and whether he will choose to resign or to attempt to carry on, amid increasing calls from his caucus and even anonymous Cabinet ministers to resign. Media reports suggests he is mulling both options and getting conflicting advice in that respect from those closest to him and will make a decision in the new year. The Prime Minister has not spoken to the media since Monday’s bombshell. However, regardless of what he ultimately decides as to his political future, in the face of Mr. Trump’s inauguration on January 20, 2025, and the planned resumption of Parliamentary business on January 27, 2025, a prorogation of Parliament Prorogation of Parliament | Knowledge | Fasken may be the logical next move for a struggling Prime Minister and government looking to regain the initiative while staying in power.
While prorogation would buy the Liberal government some time, it would also mean that Parliament would be circumscribed in its ability to provide additional financial support and/or nimbly respond through legislative measures to what the future Trump administration throws Canada’s way early in 2025.
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