President Donald Trump announced Friday that he is halting all trade negotiations with Canada in response to its plan to enforce a digital services tax on large technology firms, calling the move “a direct and blatant attack” on the United States, reports AP.
In a post on his social media platform, Trump said Canada had formally notified Washington that it would proceed with the tax, which is scheduled to take effect Monday. The 3% levy applies to revenue generated from Canadian users by both domestic and foreign digital platforms — including U.S. tech giants such as Amazon, Google, Meta, Uber, and Airbnb.
“Based on this egregious tax, we are hereby terminating ALL discussions on trade with Canada, effective immediately,” Trump wrote. “We will let Canada know the tariff they will be paying to do business with the United States of America within the next seven-day period.”
The announcement marks a sharp escalation in tensions between the two allies and is the latest twist in Trump’s aggressive trade agenda since returning to office in January. Talks between the U.S. and Canada had shown intermittent progress, with both sides setting a 30-day window for discussions during the G7 summit in Alberta earlier this month.
Canadian Prime Minister Mark Carney responded cautiously, saying, “We will continue to conduct these complex negotiations in the best interests of Canadians. It’s a negotiation.”
Trump, speaking later from the Oval Office, predicted that Canada would withdraw the tax under pressure. “Economically, we have such power over Canada. We’d rather not use it,” he said. “It’s not going to work out well for them. They were foolish to do it.”
Asked whether Canada could resume trade talks, Trump replied, “They could remove the tax — they probably will — but it doesn’t matter to me.”
The digital services tax, signed into law last year, will apply retroactively and could result in a $2 billion bill for U.S. companies by month’s end. Tech industry groups welcomed Trump’s strong response.
“We appreciate the Administration’s decisive reaction to Canada’s discriminatory tax on U.S. digital exports,” said Matt Schruers, president of the Computer & Communications Industry Association.
Treasury Secretary Scott Bessent, speaking after a private meeting with Senate Republicans, declined to comment on the announcement. “I was in the meeting,” he said, before moving on to other questions.
The U.S. has already imposed steep tariffs under Trump’s second administration, including 50% on steel and aluminum and 25% on autos. Additional 10% import taxes apply broadly, with a July 9 deadline looming for a new round of rate increases following the end of a 90-day negotiating period.
Canada and Mexico are also subject to tariffs of up to 25% under Trump’s executive order targeting fentanyl trafficking, though some goods remain exempt under the U.S.-Mexico-Canada Agreement (USMCA), signed during Trump’s first term.
Canada remains a critical economic partner for the U.S., supplying 60% of its crude oil imports and 85% of its electricity imports. It is also the top foreign source of steel, aluminum, and uranium, and home to 34 minerals the Pentagon deems essential to national security.
Daniel Béland, a political science professor at McGill University in Montreal, said the new dispute reflects long-standing tensions over digital taxation. “The Digital Services Tax Act was signed into law a year ago,” Béland noted. “But President Trump waited until the eve of its implementation to create drama amid already volatile trade talks.”
Bd-pratidin English/ Jisan
