Canadian business leaders say Freeland’s resignation adds uncertainty to trade talks

Some business leaders worry the resignation of Finance Minister Chrystia Freeland from the federal cabinet leaves Canada without a “quarterback” at a critical moment for the country’s economy and trade relationships.

Freeland’s resignation letter, which she posted to social media Monday, warned Canada faces a “grave challenge” with the incoming Trump administration in the U.S. and its threat of tariffs.

In the letter, she told Prime Minister Justin Trudeau that Ottawa needs to take the threat seriously while “eschewing costly political gimmicks, which we can ill afford and which make Canadians doubt that we recognize the gravity of the moment.”

Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, said the federal government is now missing the “most experienced and competent hand we have in Canada-U. S. relations at the time when we need it the most.”

“We’ve got the toughest opponent we have ever faced for U.S.-Canada trade getting inaugurated and promising to do Day 1 damage to Canada,” he said.

“We’re very late in the game. We’ve got a system, we’ve got a team. We don’t have a quarterback.”

While Volpe said it seems Trudeau has a good sense of how to deal with U.S. president-elect Donald Trump — he commended Trudeau’s trip to Mar-a-Lago after Trump threatened a 25 per cent tariff on Canadian goods — he said the prime minister should not be Canada’s chief trade negotiator.

Volpe praised Freeland’s approach during renegotiations of the North American Free Trade Agreement during the first Trump administration, saying she brought a “steady hand” and a willingness to involve industry stakeholders in talks.

“We ended up with a new NAFTA that, on the whole, I think most people consider to be positive for Canada,” he said.

“None of us were hoping to go back into that dynamic again, but Donald Trump has decided that we are going to and one of the things that gave me and the industry comfort is we’re going back in with the winning quarterback.”

Goldy Hyder, president and CEO of the Business Council of Canada, said Freeland’s decision to step aside “brings into question whose interests the federal government is looking out for.”

He called it “deeply troubling that the former finance minister believes the government is opting for ‘costly political gimmicks’ at a time when federal finances are severely strained.”

The government’s move to offer a two-month GST break on certain goods over the holidays kicked in on Saturday, but has received lukewarm support from consumers and businesses.

Freeland’s resignation also threw into disarray the Liberal government’s plans to unveil a fall economic update on Monday.

“Canadians have a right to know the country’s fiscal picture, and businesses need the facts. How has the government spent taxpayers’ money? How large is the deficit?” Hyder said in a statement.

“The country is facing significant economic headwinds over the coming weeks … We must put the national interest above all else and ensure the country is operating from a position of strength, not weakness.”

Freeland’s resignation was the latest in a series of events that add uncertainty in Canadian markets, said Tu Nguyen, an economist at RSM Canada.

She said in an online post that the Canadian dollar slipped to its lowest in over four years — since the middle of the COVID-19 pandemic — after Freeland’s announcement.

“Although the impact on the financial markets has been moderate, an event like this could contribute to Canada’s challenge to attract foreign investments in 2025, when a Trump administration comes with trade policy uncertainty with Canada,” she said.

Council of Canadian Innovators president Benjamin Bergen added the announcement “exposes deeper cracks in the government’s ability to provide the stable, consistent leadership that businesses need.”

“Confidence in the government’s economic management is already low, and today’s chaos only reinforces that view,” he said in a statement.

This report by The Canadian Press was first published Dec. 16, 2024.

Sammy Hudes, The Canadian Press