OTTAWA—Prime Minister Justin Trudeau once considered quitting politics long before Monday.
On the day he announced his coming resignation, Trudeau wrote his own first draft of history. He told the nation he is a fighter who never backs away from a fight — that he wouldn’t be stepping down if it weren’t for his internal caucus struggles that eclipsed his ability to stay on.
In fact, in early 2023, months before Trudeau publicly revealed his separation from his wife Sophie Grégoire Trudeau, the prime minister seriously weighed leaving office, the Star has learned.
Their 18-year marriage had been on the rocks for a while. His third-term Liberal government had emerged from the COVID-19 pandemic struggling to find its footing amid high interest rates and punishing inflation. An inquiry slammed a failure of federalism during his handling of the 2022 “Freedom Convoy” emergency. And national security leaks on foreign electoral interference pummelled the Trudeau government as incompetent and indifferent to a growing threat.
A visit to Canada by U.S. President Joe Biden in late March that year rallied Trudeau. By May’s Liberal convention, he’d chosen to stay on — a fateful decision for him, his legacy, and his party’s fortunes.
The prime minister believed then, and may still believe, that he alone can beat Conservative Leader Pierre Poilievre. His resolve only crumbled in the first days of this month.
The trigger for that decision is clear. The exact moment of it is not.
Multiple sources spoke to the Star for this story on condition their names would not be revealed.
One source said the prime minister came to his decision to leave over the holidays, that it evolved, and there was no one event or conversation that persuaded him, but “a combination of things,” including calls for him to go from majorities of his Ontario, Atlantic and Quebec caucuses.
Trudeau talked about his future to very few trusted friends and advisers, including at least one outside politics, in the past several weeks.
Sources who spoke to the Star also agreed the catalyst for the prime minister’s downfall was Chrystia Freeland’s explosive exit as finance minister on Dec. 16, and Trudeau’s failed effort to ensure Mark Carney, Canada’s former central banker, would replace her.
Trudeau and his team didn’t see it coming. They thought they had agreements that would see strong performers in two key roles — Carney as finance minister and Freeland on the critical Canada-U.S. challenge.
However, the seeds of the political disaster to come were sown long beforehand.
“This was the product of bruised egos over the course of six months,” said one Liberal source who was close to the events as they unfolded.
Sources in both Trudeau’s and Freeland’s camps say Freeland was hurt by leaks in July suggesting Trudeau and the Prime Minister’s Office viewed her as a poor communicator and had offered her job as finance minister to Carney.
Those leaks were wrong on a key point: Trudeau did not guarantee or even offer Carney the finance portfolio then or any time prior to December, sources say.
However, neither Trudeau nor his team — who viewed the leaks as “ridiculous” given how much Trudeau trusted Freeland — effectively dampened the speculation. In part, that was because some of them, and much of the Liberal caucus, did see Freeland as an ineffective communicator (for instance, when she urged Canadians who were worried about the cost of living to cancel their Disney Plus subscriptions) and wanted her shuffled, especially after the party’s byelection loss in Toronto—St. Paul’s rattled all of them.
But the leaked stories — which Freeland took to heart — were correct on one point: Trudeau and his advisers had been trying to persuade Carney, a godfather to Freeland’s son, to join the team for a long time.
Carney always declined.
At least as far back as 2019, Trudeau’s Liberals made failed efforts to recruit Carney to run in an Ottawa riding.
In September 2018, Carney had just agreed to extend his term as governor of the Bank of England to January 2020 to help navigate Brexit.
Although Carney chose not to run, he made clear to the Liberals that for family reasons, he would prefer an Ottawa riding if it ever came to that.
He did, however, deliver a keynote speech at the Liberals’ virtual convention in 2021, held amid the pandemic, and promised to do “whatever I can to support the Liberal party.”
Talks began anew last spring to lure Carney in and continued into the late summer, culminating with Carney agreeing in September to write an economic growth report for the Liberal Party of Canada that would be incorporated into a future platform.
“He’s a serial fence-sitter,” said one Liberal — a sentiment echoed by others.
In December, talks with Carney were again underway in earnest.
By that time, Freeland had had weeks of tense discussions with the prime minister over the fall economic statement. The government would need the support of New Democrats to pass any new measures, and they had publicly called for a GST cut as an affordability measure. The prime minister and his office hammered Freeland to deliver measures — like their proposed GST cut — that would fly with the New Democrats.
Two sources said she wanted to avoid ongoing structural commitments, and that it was Freeland who proposed the time-limited, $1.6-billion GST holiday on certain goods . But Freeland was cool to the idea of sending Canadians $250 cheques that the PMO wanted.
Several sources said Freeland was determined that the fall update would hew to the fiscal “anchor” or goal of a declining debt-to-GDP ratio, even though she had to report a whopping $60-billion deficit for the year just ended.
On Dec. 2, Trudeau and Freeland met in her office. Sources agree Trudeau signalled then that he wanted her to stay on as his finance minister, although Freeland was having doubts that he actually did.
Freeland had found Trudeau’s decision to exclude her from a Nov. 29 trip to Florida to meet with U.S. president-elect Donald Trump “perplexing” and “confusing,” despite publicly suggesting she understood it as the “right choice,” since borders were on the agenda and that was the purview of then-public safety minister Dominic LeBlanc.
The prime minister and Freeland met again in person on Dec. 8, at his residence in Rideau Cottage, and signed off on the fall economic update. While it would include the temporary GST break, Trudeau agreed not to book the $4.7 billion for the promised $250 cheques for Canadians who had earned income in 2023 — which his team saw as a multibillion-dollar win for Freeland.
Still to come that week was a decision on Freeland’s proposal to book $12 billion in cuts and launch a review of program spending.
But on a Sunday night, six days before she quit, sources close to Trudeau said the pair discussed the prime minister’s desire for Freeland to take on a new role on the Canada-U.S. file. Two sources said the prime minister was clear that Freeland would remain deputy prime minister, and that she said she looked forward to seeing how the proposed new role would be defined.
Another insider said that mischaracterizes the conversation. They say Freeland made clear she believed Trump’s threat to impose tariffs on Canadian imports needed to be strategically addressed, that she knew Scott Bessent, Trump’s pick for Treasury secretary who would be her counterpart, and she expected to lead the response from her position as finance minister.
Over the course of the week, there were other conversations between their offices, the sources said. The insiders disagree about whether Freeland was told she would additionally take on the title of intergovernmental affairs minister because of the need to co-ordinate with the premiers.
On the prime minister’s side, he and his team viewed the new role not as a demotion — as Freeland’s letter later portrayed it — but rather as a position Freeland was most suited for, having led Canada’s response to the NAFTA renegotiations and steel and aluminum tariffs during Trump’s first administration. The fact that Trump doesn’t like her was not seen as a drawback, they said.
Yet sources close to Freeland say she was angered by the offer of an undefined role with no staff, separate department, or statutory authority to levy tariffs against the U.S., which reside in law with the finance minister.
“That’s bulls—-,” countered one of the sources familiar with their discussions. That source said Freeland would have directed Canada’s response, including how to wield the authorities of the departments of Global Affairs and Finance, with all the resources of the Privy Council Office, a department and central agency that as deputy prime minister she would continue to have full access to.
On Wednesday, Dec. 11, the prime minister and his office put the kibosh on the $12 billion in cuts she proposed. A source close to Trudeau said she had pitched the package only about 10 days before, and it was not thoroughly thought through. A source close to Freeland said it had been “many weeks” in the offing, and she’d advocated it as part of Canada’s readiness for the fallout of a future trade war.
By Friday, Dec. 13, it became clear during a video conference call — with Freeland in Toronto and Trudeau in Vancouver — that they were far apart on their understanding of what the other wanted.
According to Freeland’s resignation letter, Trudeau told her then that Carney would become his finance minister after the economic statement she was to deliver the following Monday.
It was the first time, according to sources close to Freeland, that Trudeau explicitly told her she’d be out of that portfolio.
Freeland told Trudeau she did not want to go along with that, and the call ended badly, say both sides.
Freeland and Trudeau did not speak again. There were additional conversations between their senior staff members, but it was clear to some that Carney had over the weekend decided he, too, was out.
By Monday, Dec. 16, it was all over.
On the day she was to deliver the Liberal government’s long-awaited fall fiscal update, Freeland phoned Trudeau just as he was arriving at Parliament Hill to lead a cabinet meeting.
Shortly after their call, Freeland posted her damning letter on X, accusing Trudeau of wanting to fire her because she had argued against blowing the budget on “costly political gimmicks.”
She portrayed Trudeau as undermining Canada’s fiscal capacity to respond to a looming tariff war with the Trump administration.
Several insiders say the prime minister was shocked and devastated. Trudeau immediately believed it was a blow that would make it impossible for him to stay on, said three sources.
One said the prime minister went into a dark place. Chaos reigned behind closed doors.
The media lock-up for what is essentially a mini-budget hadn’t started, but the stock markets and the Canadian dollar dipped upon news of Freeland’s resignation.
The PMO had already understood Carney was also no longer on board, and Trudeau named LeBlanc to replace Freeland. The prime minister was persuaded to take time to reflect, and to not make any sudden decisions.
The government determined the economic update — which revealed a $60-billion deficit — had to be released as scheduled. (Much of the eye-popping deficit was ascribed to liabilities for Indigenous legal cases, in part at Freeland’s insistence.)
Carney’s team says that in the 24 hours after Freeland’s announcement, he made clear to the Trudeau government he was out.
A source close to Carney said he had originally agreed in December to be part of a bigger governing team that was going to help Canada navigate the economic peril posed by Trump’s incoming administration. That source declined to say whether Carney had agreed specifically to take on the finance minister’s job, which multiple sources confirmed Trudeau had asked him to fill.
In Carney’s mind, Freeland had been an integral part of the team, and with that clearly no longer the case, he was not willing to sign on, the source said.
It was a colossal mess, one Trudeau could not recover from. He was now a fighter not just on the ropes, but down for the count.
