US President Donald Trump Terminates Trade Talks with Canada Over Digital Services Tax
US President Donald Trump has terminated all trade discussions with Canada, accusing Ottawa of launching a ‘direct and blatant attack’ on the United States through its digital services tax. The announcement marks a significant escalation in the already tense relationship between the two countries, which has been characterized by a series of retaliatory tariffs and trade disputes.
The decision comes just days after Trump had previously suspended the 25% tariffs on Canadian goods, which were imposed in February 2024. These tariffs, a key component of Trump’s protectionist policy, were met with reciprocal measures from Canada. Despite the suspension, Trump has remained steadfast in his criticism of Canadian economic policies, arguing that the country unjustly benefits from US subsidies.
Trump’s latest move is a direct response to Canada’s implementation of the digital services tax in June 2024. This tax requires tech companies providing digital services in Canada to pay a 3% levy on profits exceeding CAD 20 million ($14.5 million). The tax is retroactive to January 1, 2022, and the first payments are due by the end of this month. Major US tech giants, including Amazon, Apple, Airbnb, Google, Meta, and Uber, are expected to pay an estimated $2 billion in total by the end of July 2024.
Trump’s administration has framed this tax as an ‘attack’ on US business interests, arguing that it unfairly targets American companies operating in the Canadian market. In a post on his Truth Social platform, Trump stated, ‘Canada, a very difficult Country to TRADE with… has just announced that they are putting a Digital Services Tax on our American Technology Companies, which is a direct and blatant attack on our Country.’
The US president vowed to notify Ottawa of the ‘Tariff that they will be paying to do business with the United States of America within the next seven day period.’ The exact terms of this new tariff have not been disclosed, but experts suggest it could range from 5% to 10% to discourage Canadian businesses from engaging in the US market.
Canadian Prime Minister Mark Carney, in a statement following the announcement, said, ‘Canada will continue to conduct these complex negotiations in the best interests of Canadians.’ However, he acknowledged that he had yet to speak directly with Trump about the issue, indicating that the dialogue between the two nations is currently stalled.
Carney has previously criticized Trump’s tariffs as ‘unjustified’ and assured that Canada would ‘win’ the trade war with the United States. He has also made it clear that Canada will ‘never, ever, in any way, shape, or form, be part of the United States,’ emphasizing the country’s commitment to maintaining its sovereignty and trade independence.
The implications of Trump’s decision could be significant for both the US and Canadian economies. The imposition of new tariffs on Canadian goods could lead to a sharp decline in bilateral trade, particularly affecting industries that rely heavily on cross-border commerce. Additionally, the new tax on digital services may encourage US tech companies to seek alternative markets, potentially leading to a shift in global investment and operational strategies.
Analysts are warning that the situation could escalate further if neither country is willing to compromise. The ongoing trade tensions reflect broader geopolitical tensions between the US and its allies, with each side using economic tools to assert influence and protect national interests. As the situation develops, the impact on global markets and international trade relations will continue to be closely monitored.
As the world watches, the potential for increased trade barriers and the realignment of economic strategies could have far-reaching consequences for both nations and the global economy.