Trump ‘terminating’ trade talks, threatens tariffs over Ottawa’s digital services tax

U.S. President Donald Trump said Friday he is “terminating all discussions on trade with Canada” and threatening new tariffs over Ottawa’s plans to push ahead with a digital services tax, taking effect at the end of the month.

Trump posted on his Truth Social page at around 1:44 p.m. that the proposed digital tax was “a direct and blatant attack on our Country [sic].”

He said Canada was “copying the European Union, which has done the same thing, and is currently under discussion with us, also [sic].”

The post also stated that all discussions on trade with Canada was terminated “effective immediately” and the country will know “the Tariff that they will be paying to do business with the United States of America within the next seven day period.”

It comes just days ahead of a major deadline that will have big U.S. companies shell out revenue to the Canadian government.

Prime Minister Mark Carney has been negotiating in private with Trump and announced earlier this month they are pursuing a deal to end the stop-and-go tariff war. At the G7 summit in Alberta, Carney and Trump agreed to try and reach a deal by mid-July.

The digital services tax is a three per cent levy on revenue from Canadian users using digital services such as Amazon, Google, Meta, Uber and Airbnb. It takes effect on June 30 but is retroactive for three years. The initial bill is expected to total close to $2 billion.

The United Kingdom kept a similar tax in a trade deal with the U.S. that was signed last week at the G7 summit in Alberta.

The Business Council of Canada has called on Ottawa to suspend the tax.

“Canada should put forward an immediate proposal to eliminate the DST in exchange for an elimination of tariffs from the United States,” wrote the group’s CEO Goldy Hyder, adding Trump’s decision is the “unfortunate development” the group had warned about.

In recent days, various industry associations have reached out to Ottawa urging the government to pause the tax to avoid U.S. retaliation. The Canadian Chamber of Commerce warned that the “punitive” tax could prompt the U.S. to target retirement and pension funds.

Earlier this month, 21 members of the U.S. Congress wrote to Trump saying the tax could inspire other “discriminatory cash grabs” that largely target American companies.

But on Thursday, congressional Republicans agreed to remove a so-called “revenge tax” provision from Trump’s major tax-cut bill, in response to a request from Treasury Secretary Scott Bessent.

That provision would have allowed Washington to impose taxes on companies and investments from countries charging what it called “unfair foreign taxes” on American firms.

This is a developing news story. More to come.

With files from The Canadian Press.

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