By David Ljunggren and Ismail Shakil
OTTAWA (Reuters) -Canada’s Finance Minister Chrystia Freeland unexpectedly resigned on Monday over a policy clash with Prime Minister Justin Trudeau, dismissing his plans for increased spending as “political gimmicks”.
Freeland quit just hours before she was due to present a fall economic update to parliament, a document widely expected to show the minority Liberal government had run up a much larger 2023/24 budget deficit than predicted.
The resignation by Freeland, 56, who also served as deputy prime minister, leaves Trudeau without a key ally in cabinet ahead of an election which polls suggest he will lose badly.
“For the last number of weeks, you and I have found ourselves at odds over the best path forward for Canada,” Freeland said in a letter to Trudeau posted on X.
Freeland had been finance minister since August 2020. There was no immediate reaction from Trudeau’s office.
Domestic media reports said Freeland and Trudeau had clashed over a government proposal for temporary tax breaks and other spending measures.
Freeland said the threat of new tariffs on Canadian imports by the incoming administration of U.S. President-elect Donald Trump represented a grave threat.
“That means keeping our fiscal powder dry today, so we have the reserves we may need for a tariff war. That means eschewing costly political gimmicks, which we can ill afford,” she wrote.
One potential replacement could be former Bank of Canada governor Mark Carney, who already serves as an economic advisor to Trudeau. Carney though is not a legislator and tradition dictates he would need to run for a seat in the House of Commons elected chamber.
“On Friday, you told me you no longer want me to serve as your Finance Minister and offered me another position in the Cabinet,” Freeland said.
“Upon reflection, I have concluded that the only honest and viable path is for me to resign from the Cabinet.”