Washington, D.C. – In a sharp escalation of tensions, former President Donald Trump announced Friday that the United States is terminating all trade discussions with Canada, citing Ottawa’s decision to impose a digital services tax targeting American tech giants.
The unexpected announcement, posted on Truth Social, accuses Canada of mimicking the European Union’s digital tax policies and launching what Trump labeled “a direct and blatant attack” on U.S. technology companies.
“Canada… has just announced that they are putting a Digital Services Tax on our American Technology Companies,” Trump wrote. “Based on this egregious tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately.”
He further stated that a new tariff structure would be announced within seven days, adding, “We have such power over Canada.”
In a follow-up remark from the Oval Office, Trump criticized Canada’s actions as “foolish” and confirmed that the U.S. would cease all negotiations immediately.
A Strained Trade Relationship
Canada’s new tax, set to take effect retroactively from 2022, is expected to impact multinational tech firms such as Amazon, Google, and Meta. Despite pressure from Washington, Ottawa has refused to delay or withdraw the measure.
The office of Canadian Prime Minister Mark Carney has not yet responded publicly to Trump’s statements.
U.S. Treasury Secretary Scott Bessent expressed strong disapproval, calling the retroactive nature of the tax “patently unfair.” He noted that Trade Representative Jamieson Greer is expected to initiate a Section 301 investigation into the potential economic harm caused by the Canadian tax.
Markets React to Uncertainty
Following the announcement, both the S&P 500 and Nasdaq Composite reversed earlier gains and turned negative. The sudden halt in trade talks threatens a relationship worth over $760 billion annually, according to the U.S. Trade Representative’s Office.
With trade relations between the two close allies now in jeopardy, all eyes are on Washington and Ottawa as tensions rise over digital tax policies and economic sovereignty.
