President Donald Trump has abruptly terminated all trade negotiations with Canada, citing the country’s imposition of a digital services tax on American technology companies as the primary reason. Trump described the tax as “egregious” and accused Canada of “copying the European Union” with what he called a “direct and blatant attack on our Country.”
In a post on his social media platform Truth Social, Trump announced the decision to end all ongoing trade discussions, stating: “Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately.” He also warned that the United States would impose tariffs on Canadian goods within the next week, although specific details have yet to be disclosed.
The US president criticized Canada as “a very difficult country” to trade with, pointing to previous Canadian tariffs on American dairy exports. The two nations had been working toward a trade agreement expected to be finalized by mid-next month, despite earlier reciprocal tariffs imposed earlier this year.
Canada’s digital services tax, passed last year and applying retroactively to 2022, targets major US tech giants such as Amazon, Google, Microsoft, and Meta. The tax is designed to ensure these companies pay their fair share on revenues generated in Canada, with the first payments scheduled to begin this Monday. Canadian officials have remained firm in their commitment to the tax, despite pressure from the Trump administration.
Following the announcement, both the US S&P 500 and Nasdaq markets experienced significant declines after reaching record highs earlier on Friday.
The office of Canadian Prime Minister Mark Carney confirmed that the government is currently reviewing the situation and formulating a response to the US decision.
Canada remains one of America’s largest trading partners, with bilateral trade in goods totaling $762 billion (£556 billion) last year. Trump’s move marks a serious escalation in tensions between the two countries, adding to an already fraught trade relationship.
Trump’s hardline stance on Canada follows a history of contentious remarks, including past threats to annex the country as the United States’ 51st state. Such comments have previously sparked widespread outrage in Canada and influenced political dynamics, including aiding the rise of Prime Minister Carney.
