Trump Ends US Trade Discussions With Canada Over Digital Tax

President Donald Trump announced a complete halt to trade negotiations with Canada on Friday, blaming the country's plan to enforce a new digital services tax. 

He also warned of new tariffs to be announced within the week. 

Trump said in a post on Truth Social on Friday that, “Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately,” comparing it to the European Union’s Digital Markets Act (DMA). 

Canada’s digital tax law imposes a 3% charge on income from digital services accessed by Canadian users, targeting companies with over C$20 million ($14.6 million) in annual domestic revenue. 

This measure could affect prominent American tech firms, including Meta Platforms Inc. (META) and Alphabet Inc. (GOOGL) (GOOG).

According to a Bloomberg report, Canada’s financial markets reacted swiftly, with the Canadian dollar and stock index both retreating in response to Trump’s statement. 

International negotiations are already in motion regarding digital taxes. A July 9 deadline looms for several nations, after which steeper U.S. tariffs could be reinstated unless agreements are reached. 

However, Canada and Mexico are negotiating separately with Washington, having been previously targeted over other disputes, including immigration and illicit drug trade.

In remarks last week, Canada’s Finance Minister Francois-Philippe Champagne suggested the digital services tax could still be reconsidered, noting it remains “part of broader discussions” taking place between Canada and the U.S.

U.S. lawmakers are opposing Canada’s digital tax, warning it could cost American firms $2 billion. A proposed G-7 compromise remains uncertain due to Canada’s unclear stance.

Also See: Alibaba Expands Qwen AI Suite In Broader AI Push, But Retail Sentiment Stays Tepid

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