U.S. President Donald Trump said Friday he’s terminating all trade discussions 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,” Trump said in a social media post.
Canada and the U.S. have been locked in negotiations to get Trump to lift his punishing tariffs on Canadian goods, levies that have already led to major economic dislocations, job lossesย and a drop in southbound exports. Trump and Prime Minister Mark Carney agreed at the G7 last week to reach some agreement on the trade dispute within 30 days โ a timeline that is now very much in doubt.
Trump says he’s pulling back from the bilateral trade discussions because Canada plans to move ahead with its digital services tax (DST), which requires international web giants pay a special tax.
Set to take effect on June 30, the DST would have U.S. companies like Amazon, Google, Meta, Uber and Airbnb pay a three per cent levy on revenue from Canadian users โ a policy enacted by former prime minister Justin Trudeau’s government that the Parliamentary Budget Office projectsย will bring in billions of dollars in revenue.ย
While taking effect on Monday, the policy will apply retroactively, leaving U.S. companies with a $2-billion US bill due at the end of the month.
These global digital firms are often able to skirt paying taxes in the countries where they operate, and the last Liberal government pitched the DSTย as a way to bring the tax code up to date and capture revenues earned in Canada by firms located abroad.
U.S. long opposed DST
It’s been a bone of contention between Canada and the U.S. for years, with former president Joe Biden’s ambassador to Canada warning during his tenure that, if a DST was enacted, the U.S. would hit back.
While Canada and other Organization for Economic Co-operation and Development (OECD) countries had been discussing some sort of global DST, the Trudeau government decided to move ahead with its own tax rather than wait for co-ordinated action.
Carney’s finance minister, Franรงois-Philippe Champagne,ย said last week Ottawa plans to push ahead with the tax even while negotiations with Trump and his tariffs are ongoing.
That’s what’s prompted the president’sย ire.ย
“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 said.
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