USA Trump Halts Trade Talks with Canada Over Digital Tax, Threatens New Tariffs

[Social Media]

 

Trump Halts Trade Talks with Canada Over Digital Tax, Threatens New Tariffs

 

President Donald Trump has abruptly ended all ongoing trade negotiations with Canada, lashing out at the country’s newly implemented digital services tax, which he labeled “egregious” and “a direct and blatant attack on our Country.” The decision was announced via Trump’s Truth Social platform and sent shockwaves through global markets and diplomatic circles.

 

The U.S. president accused Canada of mimicking the European Union in targeting American tech companies, stating, “They are obviously copying the European Union, which has done the same thing, and is currently under discussion with us, also.” The tax, which was passed by the Canadian government last year and is set to be collected starting Monday, applies retroactively to 2022 and targets major U.S. firms such as Amazon, Google, Microsoft, and Meta.

 

“Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately,” Trump declared. “We will let Canada know the Tariff that they will be paying to do business with the United States of America within the next seven day period. Thank you for your attention to this matter!”

 

The Canadian government, led by Prime Minister Mark Carney, has acknowledged the U.S. announcement but has yet to issue a formal response. Carney’s office told CNN that officials are currently reviewing the situation. The fallout is expected to be significant, as Canada remains one of America’s most crucial economic partners, with two-way goods trade totaling $762 billion last year.

 

The timing of Trump’s decision is particularly dramatic, as both nations had been working toward finalizing a renewed trade agreement by mid-July. That effort followed a tit-for-tat tariff exchange earlier in the year, sparked by disputes over dairy and other agricultural products. Trump reiterated his long-standing frustrations on this front, calling Canada “a very difficult country” to do business with and referencing tariffs on American dairy exports.

 

The markets reacted swiftly and negatively to the news. The S&P 500 and Nasdaq, which had both touched record highs earlier in the day, plummeted following Trump’s statement. The uncertainty surrounding potential U.S. tariffs on Canadian goods has rattled investors already concerned about global trade tensions.

 

Canadian officials have consistently defended the digital services tax, arguing that multinational tech giants should pay their fair share for revenue earned within Canada. Earlier this month, they reaffirmed that the tax would not be withdrawn, even under mounting pressure from Washington. The tax has become politically sensitive, especially after Trump’s previous inflammatory suggestion that the U.S. might annex Canada and make it America’s 51st state—an outlandish claim that outraged Canadians and played a role in Mark Carney’s rise to power.

 

Trump’s abrupt move marks a major disruption in one of the world’s most integrated trade relationships. As Canadian firms prepare for a potential wave of tariffs, and American tech giants brace for millions in retroactive tax bills, the coming days may determine whether this rift deepens or a new diplomatic channel opens to prevent further escalation.

 

  Adapted by ASEAN Now from The Times  2025-06-30

 

 

[stevenl]

5 hours ago, Social Media said:

targets major U.S. firms such as Amazon, Google, Microsoft, and Meta.

It targets all tech firms that are avoiding taxes. It's not specifically aimed at US firms, although of course they are both the biggest firms and the biggest offenders.

[stevenl]

Apparently Canada has given in and rescinded the tech tax. IMO a pity, they should have stuck to the principle and negotiated this together with the EU.
Trade talks will resume again now.