Trump announced that he is halting trade negotiations with Canada due to its decision to move forward with a tax targeting tech companies and added that Canada would face the consequences of this action within “seven days.” In a Truth Social post, Trump slammed the move, referring to the tech tax as ” a direct and blatant attack on our country.”
“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,” Trump said in his post.
Drawing Trump’s Ire
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The Canadian government plans to implement the tax starting Monday. The digital services tax will impose a 3 percent charge on revenue earned from Canadian users by major companies such as Amazon, Google, Meta, Uber, and Airbnb. The tax will be applied retroactively, resulting in U.S. firms owing $2 billion by the end of the month.
Speaking to reporters, the President said that “Canada has been a very difficult country to deal with over the years.”
However, he voiced certainty that Ottawa would eventually back off, saying, “We have all the cards. We have all – every single one.”
“We do a lot of business with Canada, but relatively little they do most of their businesses with us,” he added. “Economically we have such power over Canada, I’d rather not use it.”
Throughout trade talks with various nations, Trump has criticized digital services taxes, labeling them as “non-tariff trade barriers.”
No Sympathy for Canada’s Actions
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Canada and the United States have been in discussions on easing a range of high tariffs that Trump had previously placed on Canadian goods. The president accused Ottawa for “copying the European Union” with what he described as an “egregious” tax.
Several countries are currently negotiating with the U.S. ahead of a July 9 deadline, after which Trump’s hiked tariffs are set to be reinstated.
However, Canada and Mexico are not part of those ongoing discussions.
Earlier this year, Trump introduced tariffs on neighboring countries, including Canada and Mexico, in response to issues related to fentanyl trafficking and immigration. Negotiations with these nations are taking place separately from other trade talks.
The president visited Canada earlier this month for the annual G7 summit but left ahead of schedule, citing developments concerning Iran.
On Thursday, Treasury Secretary Scott Bessent said that several nations are expected to suspend their digital services taxes targeting U.S. tech giants, in return for Congressional Republicans agreeing to block a proposed “retaliatory tax” on foreign investors included in Trump’s major legislative package.
However, he did not specify which countries were part of this arrangement.
