Trump Ends Trade Talks Over Canada’s Digital Services Tax

OTTAWA, Canada — U.S. President Donald Trump announced Friday that he is halting all trade discussions with Canada due to Ottawa‘s imposition of a digital services tax (DST) on major technology firms. Trump expressed his discontent and stated that negotiations will only resume once the tax is removed.

In a press conference at the Oval Office, Trump said the U.S. wields “such power over Canada” and criticized the country’s taxation strategy. “It’s not going to work out well for Canada. They were foolish to do it,” he remarked about the DST, which is set to take effect on June 30.

The DST will impose a three percent levy on revenue generated by U.S. tech companies like Amazon, Google, and Meta from Canadian users. It is designed to capture tax revenues from global digital firms that often avoid paying taxes in countries like Canada.

Earlier that day, Trump stated, “We’re going to stop all negotiations with Canada right now until they straighten out their act.” When asked if there was anything Canada could do to remedy the situation, he responded, “They will [remove the tax]. They do most of their business with us.”

Trump has warned of possible blanket tariffs on Canadian goods as a retaliation measure. The tax could leave American companies facing a hefty $2 billion bill due at the end of the month.

Canadian Prime Minister Mark Carney had previously agreed with Trump at the G7 summit to improve trade relations. However, after learning of the new digital services tax, Trump expressed frustration over Canada’s decision to proceed with the tax even during ongoing trade discussions.

Despite Trump’s threats, Carney stressed his commitment to negotiating effectively for Canadian interests. He avoided a direct response about the possibility of withdrawing the DST but indicated that Canada would persist in its negotiations with the U.S.

In a statement, Carney’s finance minister, François-Philippe Champagne, confirmed that Canada plans to enact the tax despite the trade talks. Trump’s insistence that Canada has charged high tariffs on U.S. dairy products was challenged by the Canadian government, emphasizing that agricultural products are largely duty-free.

Canada’s Foreign Affairs Minister Anita Anand asserted that the country’s supply management system for dairy is critical and vowed to pursue a trade deal that protects its economy while diversifying supply chains.

The abrupt cessation of negotiations may have surprised some Canadian officials, as recent indications suggested a positive shift in trade discussions between the two nations. However, Candace Laing, president of the Canadian Chamber of Commerce, pointed out that trade negotiations can be unpredictable, with potential for last-minute changes.