US President Donald Trump on Friday announced the immediate termination of trade negotiations with Canada, citing Ottawa’s insistence on imposing a digital services tax that targets major U.S. technology firms. Calling it “a direct and blatant attack on our country,” Trump issued the declaration on his social media platform.
“Based on this egregious tax, we are hereby terminating ALL discussions on trade with Canada, effective immediately. 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 posted.
The digital services tax, set to take effect Monday, imposes a 3% levy on revenues generated from online user engagement in Canada. This includes retroactive taxation dating back to 2022, potentially saddling U.S. companies such as Amazon, Google, Meta, Uber and Airbnb with a collective bill of nearly $2 billion.
In response, Canadian Prime Minister Mark Carney stated that Ottawa would continue negotiations “in the best interests of Canadians,” adding, “It’s a negotiation.”
Trump, however, warned of consequences. Speaking from the Oval Office, he said, “Economically we have such power over Canada. We’d rather not use it… They were foolish to do it.” When asked whether Canada could reverse the damage, he replied that removing the tax might help, but added, “It doesn’t matter to me.”
The announcement marks the latest escalation in an increasingly volatile trade relationship since Trump’s return to the presidency in January. Relations had briefly thawed when Carney visited Washington in May, followed by a G7 summit in Alberta where both sides agreed to a 30-day window to resolve trade disputes.
Industry voices in the U.S. backed Trump’s move. Matt Schruers, president of the Computer & Communications Industry Association, said, “We appreciate the Administration’s decisive response to Canada’s discriminatory tax on U.S. digital exports.”
Washington has previously imposed steep tariffs—50% on steel and aluminum, 25% on autos, and a blanket 10% on most imports—with the potential for increases after July 9, when a 90-day negotiating window closes.
Canada remains a vital economic partner to the U.S., supplying more than 60% of its crude oil imports and 85% of electricity imports. It is also the largest foreign source of steel, aluminum, and uranium, and a key supplier of critical minerals.
Despite Canada’s Digital Services Tax Act being passed a year ago, McGill University professor Daniel Beland noted the timing of Trump’s announcement. “President Trump waited just before its implementation to create drama over it in the context of ongoing and highly uncertain trade negotiations between the two countries,” he said.
Meanwhile, U.S. Treasury Secretary Scott Bessent, when asked about the halted talks, declined to comment, stating only, “I was in the meeting.”
The move adds fresh uncertainty to North American trade just five years after the signing of the U.S.-Mexico-Canada Agreement (USMCA), and with growing concerns over future tariff escalations.
