OTTAWA—Canada’s powerhouse ambassador to Washington Kirsten Hillman is stepping down in a surprise resignation as critical trade negotiations have stalled and the U.S. is toying with letting the continental free trade pact expire.

In a public statement posted late Tuesday, Hillman did not reveal the reason she is leaving in the new year, but she previously had been expected to stay on for a full year through next year’s review of the Canada-U.S.-Mexico agreement.

President Donald Trump is eyeing that review as a means to extract more trade concessions from Canada, wielding tariffs as a tool of “economic force,” and mused last week he may simply let it “expire.”

Hillman had in fact been named mere months ago to lead the sensitive trade negotiations along with Canada-U.S. Trade Minister

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