President Trump suspends all trade talks with Canada over its digital services tax targeting U.S. tech firms, warning of retaliatory tariffs within a week.
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| June 28, 2025: Trump halts U.S.-Canada trade negotiations over digital services tax impacting U.S. tech giants, warns of new tariffs in retaliation. Image: Collected |
WASHINGTON, USA — June 28, 2025:
President Donald Trump on Friday announced the immediate termination of all trade negotiations with Canada in response to Ottawa’s decision to implement a digital services tax targeting large technology firms, many of them American.
Calling the move “a direct and blatant attack on our country,” Trump said in a statement posted to his social media platform that Canada had officially informed the U.S. of its intention to proceed with the tax, which takes effect Monday.
“Based on this egregious tax, we are hereby terminating ALL discussions on trade with Canada, effective immediately,” Trump wrote. “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.”
The digital services tax, signed into law last year, imposes a 3% levy on revenues earned from Canadian users by digital platforms, including Amazon, Google, Meta, Uber, and Airbnb. The tax will also be applied retroactively, potentially leaving U.S. firms with a $2 billion bill by the end of the month.
The decision marks a new flashpoint in an increasingly volatile trade relationship between the two North American neighbors. Trump’s second term has been defined by a string of aggressive trade maneuvers, and the suspension of talks with Canada comes despite recent efforts to ease tensions.
Canadian Prime Minister Mark Carney, responding from Ottawa, struck a measured tone. “We will continue to conduct these complex negotiations in the best interests of Canadians,” he said. “It’s a negotiation.”
In remarks from the Oval Office, Trump warned of economic consequences if Canada proceeds. “We have enormous leverage over Canada. We’d rather not use it, but this won’t end well for them,” he said. “They were foolish to do it.”
Asked whether the tax's removal could restart negotiations, Trump responded, “They could — and probably will — remove it. But it doesn’t matter to me.”
Tech industry groups welcomed the White House’s response. “We appreciate the Administration’s decisive action against Canada’s discriminatory digital tax,” said Matt Schruers, president of the Computer & Communications Industry Association.
Treasury Secretary Scott Bessent declined to comment when asked about the development after a closed-door meeting with Republican senators, saying only, “I was in the meeting.”
Despite Trump’s hardline stance, Canada remains a vital trade partner. It supplies the U.S. with over 60% of its crude oil imports, 85% of electricity imports, and is the largest foreign source of steel, aluminum, and uranium. Canada also holds 34 critical minerals deemed essential to U.S. national security.
Trade relations have grown tense under Trump’s second administration, with sweeping tariffs of 50% on steel and aluminum, 25% on autos, and an across-the-board 10% import tax now in place. Another round of tariff hikes could begin on July 9 after the expiration of a 90-day negotiation window.
Daniel Béland, a political science professor at McGill University, noted the timing of Trump’s announcement was no accident. “The Digital Services Tax Act was signed into law a year ago, so its implementation was no surprise,” Béland said. “Trump is using the moment to amplify drama around already delicate trade negotiations.”
As of now, it remains unclear whether Canada will reconsider the tax or if Trump will follow through with retaliatory tariffs, potentially impacting a wide range of sectors across both economies.