Ex-Finance Minister Chrystia Freeland’s Vision for Canada in the Trump Era
(Bloomberg) -- Never miss an episode. Listen and follow The Big Take on Apple Podcasts, Spotify or wherever you get your podcasts.
Most Read from Bloomberg
Texas HOA Charged With Discrimination for Banning Section 8 Renters
Newsom Enlists Magic Johnson, Guggenheim CEO for LA Rebuilding
Budapest Mayor Aims to Block Orban’s Plans to Build ‘Mini Dubai’
Chrystia Freeland sent shockwaves through Canada when she resigned as Prime Minister Justin Trudeau’s Finance Minister in December. Her public resignation letter blasted Trudeau for not doing enough to prepare for the second Trump administration. Now, she’s running to replace him.Freeland sat down with Big Take host David Gura in Toronto on Tuesday to discuss her views on US-Canada trade, and how she says she would negotiate with Trump if she becomes Canada’s next leader.
Listen and follow The Big Take on Apple Podcasts, Spotify or wherever you get your podcasts.
Terminal clients: click here to subscribe.
Here is a lightly edited transcript of the conversation:
David Gura: Chrystia Freeland, Canada's former finance minister and deputy prime minister, sent shockwaves around the world when she stepped down from Prime Minister Justin Trudeau's cabinet in December. She had been seen as one of Trudeau’s closest allies.
BTV: The way that she resigned has shaken the government to its core.
BTV: Why did she do this?
BTV: She was his most powerful minister.
Gura: In a fiery resignation letter, Freeland blasted Trudeau for not doing enough to prepare for the challenges of a second Trump term. Her resignation set in motion a series of events that culminated in a new leadership election. Trudeau is stepping down after nine years in office. Now, Freeland is running to replace him to be the next leader of the Liberal Party, and her pitch to Canadians is there is no candidate better equipped to deal with Donald Trump, who has threatened to impose a 25% tariff on Canadian goods on February 1st. I sat down with Freeland on Tuesday in Toronto for an exclusive interview.
Chrystia Freeland: Today, for Canada, the most significant economic fact and reality is that Donald Trump is President with a plan to change the world. And we don't need to be afraid of that. We need to have a plan to deal with it, and we need to recognize the magnitude of the challenge.
Gura: I'm David Gura and this is The Big Take from Bloomberg News. Today on the show: My interview with Chrystia Freeland, Canada’s former finance minister who is calling for a proactive response to Trump’s proposed tariffs as she makes her case to be Canada’s next leader. We talk about Trump’s second term, and what she sees on the horizon for one of the US’ closest allies. This interview has been lightly edited and condensed for clarity. The full interview is available on Bloomberg dot com, and on the Bloomberg Terminal.
Gura: Thank you very much for doing this. Appreciate it.
Freeland: It is great to be with you, David. Thank you for coming to Toronto. I hope you're not freezing today.
Gura: It was very cold. The wind was fierce last night when we got here.
Freeland: That's why Canadians are so tough.
Gura: Fair enough, fair enough.
Freeland: That winter trains us.
Gura: Let's get right to it. And if President Trump follows through on this threat to impose 25% tariff across the board on Canadian goods, how should Canada respond?
Freeland: Well, I think we should start responding today. I think that we should publish for consultation. A retaliation list. I think it should be massive, right? It should be 200 billion. That's not saying that we retaliate at 200 billion, but giving us like a menu, like a smorgasbord of choices. And we need to publish it now, because when President Trump says America first. I believe him, and I believe that he doesn't care that much if Canadian politicians are jumping around, banging our fists on the table, etc. But he cares about Americans. And I want Wisconsin dairy farmers to see themselves on that list and to be calling the White House and to be saying, Mr. President. We elected you, but now it's going to be terrible. We're not going to be able to sell stuff to Canada. I want Michigan blue collar workers who make washing machines in Michigan to see their washing machines on the list and to call up the White House and say, Mr. President, what the heck here? We love selling stuff to Canada. Do not do this. And the thing that I think can sometimes be missed. I think if you will permit me David to put myself in the mind of Americans, I think you guys don't think about Canada very much. I think when you think about Canada, maybe you think about hockey, maybe you think we're quite nice and we say please and thank you.
Gura: All truths as you list them, yes.
Freeland: And probably we say sorry a little more than you guys would. And I just don't think you think of us as major players, and that is fine with us, but what you miss in that calculation about Canada is uniquely in the whole world, we have economic leverage over you. You guys are not a big trading nation, but insofar as you export stuff, you sell it to your Canadian pals. We are a larger market for the United States than China, Japan, the UK, and France combined, so actually we do matter for you. And one thing that I love about Americans is you guys have a true entrepreneurial spirit and commercial spirit. You're the guys who say the customer is always right. Well, guess what? We're your main customer.
Gura: A criticism I hear of your approach is, by doing this, by coming up with that menu or that long list, you're going to further raise the hackles of President Trump. You're kind of putting more of a target on your back. What do you say to those critics who argue that?
Freeland: You know, I have a lot of respect for President Trump. I think he has been, throughout his career, underestimated. I think he is a really smart guy. And one of the things that I've observed is I think he's gonna be smarter in this administration than he was in the first one. I have good relations — this may surprise you, David — with a lot of people close to the President. One of them actually was in my house here in Toronto for supper a few weeks ago.
Gura: You want to divulge who this is?
Freeland: I’m not gonna tell you. No, of course, I'm not gonna tell you. What? He won't come back for supper, right? But he said, you know, the President has spent since the election weeks and weeks and weeks hanging out with really smart people. And he has some really good and clear ideas. So I take the President very, very seriously as a smart guy, actually, with a clear world view. I also observe his negotiating style. And what I observe, which I think everybody sees, is this is not a guy for whom weakness is attractive. I would say for President Trump, weakness is a provocation. I think capitulation is not a negotiating strategy with him. This person close to the president said to me, this was before the inauguration, he said, Trump thinks it's just great. He's going around yelling at the world, threatening the world and countries are just tripping over themselves to like, preconcede. They're negotiating with themselves. He's not even president and they're offering him a million things. And the president, quite rightly, by the way, thinks this is great. He hasn't done a single thing and the world is tripping over itself to give him stuff. Now, I truly believe that Canada and the United States today have a really fabulous, mutually beneficial, win-win productive relationship. And I think we need to and should have that in the future. But I think the way you get there — generally in life, but particularly with this president — is to say to him, you know what, really pushing us around is not a good idea.
Gura: Can I ask you what may be a dumb sounding question, and that is—
Freeland: There are no dumb questions.
Gura: Thank you. What does President Trump want? Here we are, just a few days from this February 1st deadline that he's put in place. He's talked a lot about traffic of drugs, he’s talked about immigration. Do you have a clear sense of what would have to happen for him to forgo putting those tariffs into place.
Freeland: I am not going to presume to know what President Trump wants. I think that that is up to him and the very smart people around him to say. But based on past behavior, based on what we're seeing. I think President Trump is seeking to accomplish three things. First of all, he would just like Canada to negotiate with itself as much as possible. And he'd like us to ante up tons of stuff. So that's number one. I think number two, what President Trump is trying to do, quite intentionally, is create uncertainty for investors in every country other than the United States. He wants to make investors, when they're thinking about where do you put that, the next dollar to think, we have no idea what President Trump is going to do. We know he wants us to invest in the US. We don't know what he's going to do to any other country. So what the heck? Let's put our money in the United States. And that is not a dumb strategy, right? You know, just by saying a few things on social media, you automatically suck capital into the United States. I think the third thing that the President wants to do is encourager les autres, as we would say here, and I think that, you know, as Canadians, we think about Canada and the US very much, but I know Americans, you guys don't wake up in the morning and think, hey, how's our relationship with the Canadians going? And President Trump, I do think, has clearly elaborated and sophisticated worldview of what he wants to do. And it seems pretty clear to me that he has come to the conclusion that if he can show the rest of the world, how mean and tough he can be with his closest partners and allies, how much he's prepared to beat up on those really nice Canadians who throughout history have been great partners for the US. How do you think that's going to make the Chinese feel? So I think there's that calculation as well. But I do want to offer a positive opportunity that I think is in the President's mind as well — maybe two positive opportunities, two positive exit ramps. The first one is I do think the president is very concerned about US security. Security for the USA. Economic security, but also national security. And in that context, kind of locking down your neighbors, locking down your continent makes a lot of sense. Locking down your continent by saying, Hey Canadians, be the 51st state. I really want to assure you, my American friends and neighbors, it's not going to work. That is going to get our hackles up and we're going to say a stronger no than you might ever imagine. But locking down your security by saying, ‘Hey Canada, let's work together on continental economic and physical security.’ You're going to find everyone in Canada is saying, ‘Yeah, we'll sign up to that.’ And then I think there's a second exit ramp, a second win-win scenario that I believe Scott Bessent’s confirmation as Secretary of the Treasury really opens up for the US and for Canada. Scott Bessent is an incredibly sophisticated global economic thinker. He is a man who has a very well worked out view of the global macro, not just environment, but the global macro system. And he is someone who spent his career thinking about moments when that system changes. In fact, you could say that his investing strategy has been, figure out where the imbalances are and invest there. The fact is, the global economy today is run based on the US consumer. It is run based on incredibly strong US domestic demand. And what that is requiring is that you guys run just like eye-popping fiscal deficits, which at a certain point surely are going to become unsustainable. In the meantime, China has been running, notwithstanding frequent protestations, this is going to change, an economic system that is based on selling stuff to the world and not having strong domestic demand. And China over and over again promises and fails to have strong domestic demand in China. I think it is entirely possible that the historic role that Scott Bessent has signed up for is to be the guy who writes those global financial and trade imbalances, a kind of Plaza Accords for our time. And Canada can be a valuable and intelligent partner for the US in the effort to rebalance the global economy. But we can't do it if you keep beating up on us and like slapping us in the face.
Gura: Coming up, Chrystia Freeland, on her decision to resign from Prime Minister Trudeau’s cabinet, and how her views on tax policy have changed since President Trump won a second term.
Gura: Do you feel that Canadians understand the gravity of this moment? You certainly know this Prime Minister well, have worked with him closely, and I wonder if you think that he and the government now is prepared to take the kind of hardline approach that you're advocating for here in the context of this, this campaign. Is your read that the government is approaching it with kind of a commensurate level of seriousness? And I guess aggressiveness might be, be the word.
Freeland: I am absolutely certain that Canadians understand how serious this is. I've been traveling around the country a lot. As you may have heard, we have a campaign for the leadership of the Liberal Party right now. So I've been traveling around a lot. And everywhere I go, people come up to me on the street, in malls, on airplanes, in airports. And the first thing every single person says is, ‘What are we going to do with President Trump? Be sure to tell them Canada is not for sale, our sovereignty is not negotiable.’ You're going to see us saying, guys, we actually like you. Let's keep a good thing going. But I think you're going to see a very, very deep Canadian commitment to saying, we are Canadian. And, we are not going to sacrifice one millimeter of our sovereignty, including our economic sovereignty.
Gura: So that's the Canadian side writ large. How about the government's position? How do you feel like they're approaching this and is it, is it sufficient enough in terms of its aggressiveness in the face of the threat from President Trump?
Freeland: What I'm trying to do now that I'm a leadership candidate and not in the government, is I would say help to stiffen the national spine. And I've been laying out some very clear negotiating ideas that we need to put forward. And I'm glad when I see them adopted by the government. I do have to say the Premiers are playing a really important role. I'm in touch with many of them, and that has been a very important part of Team Canada. And I also want to give a shout out to labor leaders and business leaders.
Gura: I want to ask you about the letter that you wrote resigning from your post. It had this kind of seismic effect, certainly within your party and government. We felt it in the States as well.
Freeland: That’s rare for a Canadian political event, isn't it?
Gura: Did you know at the time it was going to have that kind of seismic effect that it did?
Freeland: Oh, absolutely not.
Gura: No?
Freeland: I mean, when I wrote my letter and published it, that was on a Monday. I assumed that on the Tuesday, Mark Carney would be sworn in as finance minister. And I think that's what the Prime Minister assumed too.
Gura: Something that was in that letter was an impression that you need to do more to keep your fiscal powder dry. As you look back on the last two fiscal years, do you regret not doing more to kind of shore up the fiscal position of this country?
Freeland: Well, as you know, David, visiting us from the United States, Canada is in an outstanding fiscal position compared to you guys. I mean, you guys are looking at deficit seven plus. We're looking at a deficit, you know, one and a bit, and we have a AAA credit rating. Our debt to GDP ratio is the lowest in the G7, hugely lower than yours. So Canada, you know, the fundamental fiscal position of Canada is strong. What I did believe in the fall — and this conviction became stronger first with President Trump's election and then with his 25% tariff threat — was that we had to as a country turn all of our attention to that threat. We had to recognize that President Trump was not just blustering. I'm one of the people who takes him very seriously and sees him as a very smart guy who has a thought-out plan. That is what I saw then. That is what I see now. And so it was very clear to me that as a government, you know, it had to be like heart and nerve and sinew — everything had to be focused on that. And writing checks that would cost us six billion dollars, as this train was coming down the track, to me was irresponsible.
Gura: You invoked Mark Carney a minute ago, and he’s committed to balancing the budget — I guess, with running small deficits from time to time. Are you prepared to also call for balanced budgets? And if so, on what timeline?
Freeland: I believe that we need to be fiscally responsible. Absolutely. I believe that Canada's AAA credit rating is absolutely essential. When it comes to where our fiscal position is, let’s see what happens on February 1st and in the weeks to come. I do think when we talk about the impact of tariffs on Canada, I am medium-term 1,000%, 1,000,000%, a Google% confident that Canada will— that Canadians will stand up for Canada, that we will get through this, and we will get to a win-win position with the US. I'm, to me, that is absolutely clear because that's what the economic fundamentals say. But I am also not naive about how hard it's going to be along the way. This is going to be a very challenging economic situation for us. Tariffs will bring in revenues. For sure, our counter tariffs will, our retaliatory tariffs, and we need to use that money to support Canadian families to support Canadian businesses. But it will also be an economic hit to Canada. And so I think we need to see where that goes before committing to any specific targets.
Gura: I have a couple of questions about revenues, and the first has to do with the capital gains tax hike that you introduced and supported. You've since come back on that. It's not something that you support putting in place now, I gather, because of the context we're in, Donald Trump being re-elected—
Freeland: You gather correctly.
Gura: —the prospect of these tariffs. Part of that was raising revenue. I gather $19 billion CAD over five years. How do you replace that if that doesn't come to pass?
Freeland: As I said about my views during the fall, I take President Trump really seriously and I do believe we need to be building our policies given that new reality. I think as Canadians, by the way, we need to see some real opportunities in that new reality. So, you know, there are some sort of hoary old chestnuts of Canadian public policy, stuff that we all kind of know would be a good idea to do, but it's just so hard. So if you were a Canadian journalist, you would know interprovincial trade. The holy grail of every single Canadian public policy thinker. Very easy to say it's a good idea. Hard to do in practice.
Gura: Difficult to say it, period.
Freeland: Yeah, there you go. And easy to get the idea, right? Like if another country is threatening trade measures against us, maybe a good place to start is let's trade with each other for goodness sake. And so I think now, in the face of the US threat, it's a great opportunity to do that, and I think you're really seeing some national will around that. I think it's a great opportunity to say, guys, we have to stop getting in our own way. We have to make it easier to build stuff fast in Canada. We have to cut red tape and get big projects built because we're gonna need it. So I do want to be clear that there are some opportunities. And you know, in terms of where are we going to find revenue? I'm not unveiling all of my platform here today with you, David, even though I am enjoying the conversation immensely.David Gura Thank you.Freeland: But we have some really good ideas that I look forward to sharing with Canadians.
Gura: There's a fiscal question about your about-face on that particular tax. I think there's a larger question about the way that you advocated for it in months past. So you kind of couched it in moral terms. You had a message to the wealthiest people in this country that this was something that they had to do on moral grounds. There shouldn't be hungry kids going to school, for instance. For somebody who listened to you talking about it in that way and sees you moving away from it, what do you say if they question your kind of commitment to political principle because of that?
Freeland: Income inequality and what Canadians might call a just society — a society where we take care of each other — has been a kind of central principle of my life and my thinking since I became a sentient human. Truly, I come from a small town in northern Alberta. It's really, really cold. You're cold in Toronto today. It gets down to 40 below regularly in the winter. And people in the Peace Country, they are frontiersmen. My family were pioneers. Very proud of that. Very tough, very entrepreneurial. But like the patron saint of the Peace Country, what people said about him was, he was every man's friend and he never locked his cabin door. And that is a very powerful thing that I've known since I remember knowing words. And I do think we have to take care of each other. I wrote a book about income inequality and sort of the rise of this global plutocracy and the hollowing out of the middle class before I entered politics. I'm really proud of the things we did, I did, in government to push against it. The Canada Child Benefit, a huge measure that has lifted Canadian families, Canadian children out of poverty. I also know that today, for Canada, the most significant economic fact and reality is that Donald Trump is president with a plan to change the world. And we don't need to be afraid of that. We need to have a plan to deal with it, and we need to recognize the magnitude of the challenge. You know, John Maynard Keynes had this great line, when the facts change, I change my mind, sir. What do you do? And the difference between a United States with Joe Biden or Kamala Harris as president, both of them intended to raise the capital gains rate, versus a Donald Trump as president, is huge for Canada. You know, we started off in the conversation talking about one of my core understandings about Donald Trump, and that is that one of his objectives is: Take all the world's money. You heard that in the Davos speech, right? He was like, guys, invest your money in the United States. It'll be great.
Gura: We’re open.
Freeland: Invest your money outside the United States. It will be terrible. So he wants to suck in all the world's investment. He wants to suck in investment by Canadian businesses. And for Canadians, it's the easiest thing in the world to invest in the United States. So, we, right now, have to fight. We have to fight for Canadian jobs. We have to fight for Canadian businesses. We have to fight for Canadian investment. And that does mean we have to change our policies. And I do that without any apology whatsoever. I do that because we have to put the national interest first.
Gura: Coming up, more of my exclusive interview with Chrystia Freeland. She talks about the importance of this moment for the Liberal Party, and for Canada itself.
Gura: Wrapping up here. Let me ask you about the Liberal Party today, what it's going through, what this campaign represents, and I guess I'm bringing my bias to the table here, but thinking about what's happening within the Democratic Party in the United States after this election. Is it a fair parallel as they think about who their base of support is, who they represent, how big a tent they have? Are you and your party going through something similar, similar undulations?
Freeland: That is such an interesting question. You're the first person who's asked me that question, and I'm glad you have because I think about it a lot. And I do think for us as a party, having this leadership race is incredibly healthy. We are seeing a surge of new memberships in the Liberal Party. We are seeing a surge of interest. We're having conversations that we haven't had before. One of the things that I really believe we need to do — and I'll leave it to you to judge and your listeners whether Americans need to do it too — is where I think the right has been effective, in recent months and years, is in finding ways to connect with its own grassroots supporters, in finding ways to make regular people feel that they were being listened to and that they were driving what the policies would be. I would say that our party had become less effective at that. I think, inside our party, we had allowed the grassroots to atrophy. As a government, we functioned in a very kind of star system, one man band, decisions taken right at that apex and flowing down—Gura: For years.Freeland: —and that's not good for democracy and, you know, if, I've been spending a lot of my time meeting with grassroots liberal supporters and with Canadians who you might describe as liberal curious. And, you know, what I think, you know, the hardcore liberal supporters, what I've heard them say is, if the only time you talk to us is when you want us to write a check or knock on a door or put up a lawn sign, don't be surprised if we're disengaged. So I see this moment certainly for us here in the political center in Canada in the Liberal Party as an opportunity to, with a huge amount of energy and conviction, reinvent how we are working as a party, to really listen to Canadians, to listen to Liberals, to say to them, you're the boss, you're the boss of the party, and to Canadians, you're the boss of the government. And these are kind of words that are easy to say. I think it's important to put in structures that make that the case. And so last week I put forward some very specific proposals on reform of our party. One of them, maybe the most important one, is, you know, I don't know about you, David, but a way to understand who your boss is, is to know who has the ability to fire you. And so what I have promised is if I am chosen as leader one of the very first things I will do is say to the party membership, I want you to come up with a mechanism for a leadership review. I want you to have the right and the tools to fire me. And I can assure you when we give liberal party members that authority and that power, you will have a liberal leader who is much, much more responsive to the grassroots of the party, and you will have a stronger and better party. And you know what? You will make Canadian democracy better.
Gura: Could term limits have solved this problem? Clearly that was something that was preventing the party from thinking about who would come next and when.
Freeland: We are a strong and vibrant parliamentary democracy and, I don't think grafting features from a U.S. presidential system onto our own is really a good idea.
Gura: So, no.
Freeland: But no, no, but where I think you're driving at, I agree with, which the leader cannot be the person who decides whether she or he continues in that role. We need to be sure the grassroots have much more authority than they have today. I think we need to be sure that caucus members have much more authority than they have today, which is how the— parliamentary democracies in the Westminster system work in other countries. So, and I do absolutely believe that it was wrong. For the leader alone to be the person who decided whether he continued in government.
Gura: Last question, how determinative are these next few weeks going to be for Canada? Yes, in the context of this campaign, but as we're facing this February 1st deadline. In your letter you talked about the gravity of the moment. How do you see it in the context of, of history?
Freeland: Huge. I think we are at a hinge moment for Canada and also for the world. I think this is a time when, you know, that period, we had that, remember the end of history? Do you remember that? The end of history is now ended, and I would say even that rules based international order that we built so painstakingly after the Second World War, I think that is being shaken up. The kind of peak globalization we had with the, with China's entry to the WTO. That is being shaken up. So, you know, the tectonic plates of the global political system and the global economy are shifting right now. And that matters for Canada. And at heart, the reason that I am running to be leader of the Liberal Party and the Prime Minister of Canada is I have a plan for how Canada can not just survive this shifting of the plates, but absolutely thrive as these plates shift, thrive because of things we do at home, but also thrive because I have a real vision of how this reordering can happen in ways that are good for Canada and good for the United States. And I know that that is something we can work on together.
Gura: Thank you very much.
Freeland: Thank you.
Most Read from Bloomberg Businessweek
What America's Tech Billionaires Really Bought When They Backed Donald Trump
Indy Pass, the Anti-Vail Seasonal Ski Ticket, Is Gaining Fans
The CDC Won’t Give the Public a Full Picture of Fertility Treatment Risks
©2025 Bloomberg L.P.