President Donald Trump announced on Friday that he is ending trade negotiations with Canada after it imposed a tax on U.S. technology companies.
The US and Canada have been working to hammer out a workable trade deal after Trump announced sweeping global tariffs in April.
“We have just been informed that Canada, a very difficult Country to TRADE with, including the fact that they have charged our Farmers as much as 400% Tariffs, for years, on Dairy Products, has just announced that they are putting a Digital Services Tax on our American Technology Companies, which is a direct and blatant attack on our Country,” Trump wrote in a post on Truth Social.
The president continued, “Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately. 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.”
Canada enacted the Digital Services Tax Act on June 20, 2024. The law took effect on June 28, 2024. It imposed a three percent tax on certain digital services that exceed $20 million. The tax applies to various digital services, including advertising, online stores, social media, and the monetization of user data. The first payment for these companies is due on June 30, 2025.
BREAKING: President Trump just announced an immediate end to all trade talks with Canada.
— Marc Nixon (@MarcNixon24) June 27, 2025
Mark Carney’s pivot to the EU has officially backfired.
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Canadian Prime Minister Mark Carney said last week that he would not delay the digital services tax from taking effect.
Things had been quiet on the trade war front over the past few months. But it appears the back-and-forth might be heating up once again. However, Treasury Secretary Scott Bessent indicated that Trump was considering moving the deadline for trade deals from July 9 to Labor Day. This would give affected countries more time to work out deals with the US that would enable them to avoid harsh tariffs.
From NBC News:
Canada is the second-largest U.S. trading partner. Currently, the U.S. has a tariff rate of 25% applied to Canadian imports that don't comply with the U.S.-Mexico-Canada Agreement, the trade deal Trump inked during his first term before he upended it with a flurry of tariff announcements in his second.
The 25% tariff on non-compliant Canadian goods excludes energy products, which are subject to a 10% rate. Canada is also heavily impacted by Trump's 50% tax on steel and aluminum imports — the country is the largest foreign supplier of those materials to the U.S. And it has also been impacted by the 25% duties Trump has imposed on foreign-made vehicles and auto parts.
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