The move was made in response to Canada’s digital services tax, Trump said.
President Donald Trump announced on social media that he is ending “all” trade negotiations with Canada.
In a June 27 Truth Social post, Trump said the termination was made because of Canada’s plan to impose a digital services tax (DST), which would affect U.S. tech companies. The tax is set to take effect on Monday. The president called the tax a “direct and blatant attack” on the United States.
The policy is a 3 percent levy on revenue earned from digital services provided to Canadian users and applies mainly to businesses such as Amazon, Airbnb, and Google.
“Based on this egregious Tax, we are hereby terminating all discussions on trade with Canada, effective immediately,” the president stated. “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 that Canada “was obviously copying” the European Union, which also imposes this tax.
In March, the U.S. Trade Representative’s Office released the National Trade Estimate Report, noting that “most DSTs have been designed in ways that discriminate against U.S. companies, as they single out U.S. firms for taxation while effectively excluding national firms engaged in similar lines of business.”
“Through bilateral and multilateral engagement, the United States continued to raise serious concerns regarding Canada’s DST and to encourage Canada to withdraw or repeal the DST,” the report stated.
Then-Canadian Prime Minister Justin Trudeau implemented the tax in June 2024, and his government touted the measure as a way to level the playing field among tech companies and generate revenues to plug the hole in Ottawa’s federal budget.
Officials projected that the tax would generate approximately $7 billion over five years, with the funds dedicated to supporting public services and infrastructure.
Other nations, including France and the United Kingdom, have introduced similar taxes.
Canadian Finance Minister François-Philippe Champagne, speaking to reporters earlier this month, stated that the DST could be a part of broader discussions. In the meantime, it will be applied and enforced.
By Andrew Moran
