U.S. President Donald Trump says his administration is terminating trade talks with Canada, “effective immediately,” unless Ottawa scraps a controversial digital services tax on American tech companies.
“Based on this egregious Tax, we are hereby terminating all discussions on trade with Canada, effective immediately,” he wrote on Truth Social. “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 statement comes after Trump and Prime Minister Mark Carney had agreed at last week’s G7 leaders’ summit in Alberta to pursue negotiations on a new trade and security deal within 30 days.
“The Canadian government will continue to engage in these complex negotiations with the United States in the best interests of Canadian workers and businesses,” the Prime Minister’s Office said in a statement.Carney had been meeting with the Prime Minister’s Council on Canada-U.S. Relations when Trump made his announcement.Trump later told reporters in the Oval Office the negotiations will be stopped “until they straighten out their act” and remove the digital tax, though he later added “it doesn’t matter to me” if it’s removed or not.
“So Canada put a charge on some of our companies, and Canada has been a very difficult country to deal with over the years,” he said. “We have a great relationship with the people of Canada, but the fact that they put a charge on us—we learned about it—has been very difficult. He continued, “We have all the cards, every single one.” We don’t want to do anything bad, but we have such economic influence over Canada. I’d rather not use it, but they did something with tech companies today trying to copy Europe. They copied Europe, as you know. It’s not going to work out well for Europe either. And it’s not going to work out well for Canada. They were foolish to do it. And so I said, we’re going to stop negotiations with Canada right now until they straighten out their act.” Canadian and American business groups had been putting more and more pressure on Ottawa to put off the planned tax before it went into effect on June 30 to make room for the bilateral negotiations. Nevertheless, Canada is “going ahead” with the tax, as stated by Finance Minister François-Philippe Champagne last week. “The (digital services tax) is in force and it’s going to be applied,” he told reporters before a cabinet meeting on Parliament Hill.
Global News has reached out to Champagne’s office for comment on Trump’s statement.The digital services tax will hit companies like Amazon, Google, Meta, Uber and Airbnb with a three per cent levy on revenue from Canadian users.It will apply retroactively, leaving U.S. companies with a US$2 billion bill due at the end of the month. A June 11 letter signed by 21 members of Congress said U.S. companies will pay 90 per cent of the revenue Canada will collect from the tax.The Trump administration has been seeking to eliminate other countries’ digital sales taxes, particularly in Europe, that the U.S. argues would be unfairly harmful to American firms.
“If anybody’s going to affect a U.S. company, I want it to be us,” Trump said Friday. “And if they’re going to have to pay a penalty or a fine, let it be to us.”
U.S. Commerce Secretary Howard Lutnick praised Trump for being “willing to stand up to Canada and other countries seeking to harm our Great Companies” in a post on X.
Trump says U.S. terminating trade talks with Canada ‘effective immediately’
