Canada's government was rocked on Monday by a dispute over how the country should respond to US President-elect Donald Trump's threats of trade tariffs and "economic nationalism."
Prime Minister Justin Trudeau's second in command, Chrystia Freeland, stunned the nation by resigning as finance minister and deputy prime minister, saying that Canada needs to take a much bolder stance against Trump.
"For the past number of weeks, you and I have found ourselves at odds about the best path forward for Canada," Freeland said in a letter to Trudeau. "Our country today faces a grave challenge. The incoming administration in the United States is pursuing a policy of aggressive economic nationalism, including a threat of 25% tariffs. We need to take that threat extremely seriously. That means keeping our fiscal powder dry today, so we have the reserves we may need for a coming tariff war. That means eschewing costly political gimmicks, which we can ill afford ... That means pushing back against America First."
The deputy prime minister's remark about political gimmicks appeared to be a reference to Trudeau's plan to send out checks for C$250 (US$175.50) to most working Canadians.
Energy Trade War?
The shakeup comes amid Trump's threat to impose 25% tariffs on all imports from Canada and Mexico, which could have big implications for oil and gas trade across North America.
All three countries would likely experience significant energy price hikes from the tariffs, which economists say would be borne by consumers in the importing and exporting nations alike.
Canada ships some 4 million barrels per day of crude oil to the US, accounting for roughly 25% of US refinery throughput and all of the Midcontinent region's non-US supply.
The US also imports nearly 8 billion cubic feet per day of gas from Canada via pipeline, or roughly 45% of Canada's total gas production.
Time Up for Trudeau?
The political drama set off by Freeland's resignation was still playing out Monday afternoon, raising questions about whether Trudeau could survive this latest blow.
Elected in 2015, Trudeau and his Liberal Party have seen their popularity plummet over the past year, and they are widely expected to lose the next federal election that must take place before October 2025.
His response to the tariff threat — which included a hastily organized trip to Trump's Mar-a-Lago resort in Florida — has been criticized as passive and ineffective, as Freeland implied in her letter.
"Inevitably, our time in government will come to an end," said Freeland, who has worked alongside Trudeau since 2017, when Trump began his first term in office. "But how we deal with the threat our country currently faces will define us for a generation, and perhaps longer. Canada will win if we are strong, smart and united."
Opposition politicians were quick to respond, with Conservative leader Pierre Poilievre calling for new elections. He said the federal government was in "chaos" and that spending, bureaucracy and inflation have been "out of control" under Trudeau and Freeland.
New Democratic Party leader Jagmeet Singh called on Trudeau to resign immediately, saying he could no longer lead the country effectively.
Initial responses to Trump's tariff threat from senior Canadian politicians were restrained and diplomatic, but that started to change last week with Doug Ford, Ontario's conservative premier, saying Canada must be prepared to retaliate.