BREAKING: Trump 'terminating' trade talks with Canada over digital services tax
OTTAWA — U.S. President Donald Trump announced Friday he is putting an end to trade discussions with Canada and slapping new tariffs within the next seven days in reaction to the federal government’s digital services tax (DST) coming into force next week.
Trump made the announcement on his social media network, Truth Social.
“We have just been informed that 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,” he wrote.
“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.”
Donald J. Trump Truth Social 06.27.25 01:44 PM EST pic.twitter.com/kqmNyDXwgJ
— Commentary Donald J. Trump Posts From Truth Social (@TrumpDailyPosts) June 27, 2025
Prime Minister Mark Carney’s office issued a short statement in reaction to Trump’s latest outburst.
“The Canadian government will continue to engage in these complex negotiations with the United States in the best interests of Canadian workers and businesses,” read the statement.
Carney had already lowered expectations this week about reaching an agreement with Trump for an economic and security pact within 30 days, as agreed to during the G7 summit in Alberta, by saying “the right deal is possible, but nothing’s assured.”
The first payment for Canada’s digital tax is due Monday, according to the Finance department, and covers revenue retroactively to 2022. The tax is three per cent of the digital services revenue a firm makes from Canadian users above $20 million in a year.
The DST will affect major U.S. companies such as Meta, Google, Airbnb and Amazon.
It is unclear what prompted Trump to react to the new tax coming into force, given that it has long been in the works. Canada has been vocal about its intention to implement a DST for years and the legislation enacting the tax became law at this time last year.
Although they deplore the outcome, business groups said this was a long time coming.
Goldy Hyder, the president and CEO of the Business Council of Canada, said in a statement he has warned the government for many years that the implementation of this tax could risk undermining Canada’s economic relationship with its closest trading partner.
“That unfortunate development has now come to pass,” he said. “In an effort to get trade negotiations back on track, Canada should put forward an immediate proposal to eliminate the DST in exchange for an elimination of tariffs from the United States.”
“We continue to support our government’s efforts to negotiate the best deal possible for Canadians,” Hyder added.
Trump has already imposed punitive tariffs on Canadian goods coming into the U.S.
Those include tariffs of 50 per cent on steel and aluminum, 25 per cent on automobiles, as well as tariffs of 25 per cent on all goods that are not covered by the current Canada-U.S.-Mexico trade agreement — with an exception made for Canadian energy at 10 per cent.
While Canada has so far retaliated with over $90 billion in U.S. imports, Carney has held off from retaliating further in hopes of coming to an agreement with the U.S. He has however said he is prepared to double counter-tariffs on steel and aluminum on July 21 if talks fail.
Conservative Leader Pierre Poilievre also shared his disappointment that trade talks between Canada and the U.S. have halted and expressed hope “they resume quickly.”
“As always, Conservatives are ready to help get a good deal for Canada. We must put Canada First,” he wrote.
Poilievre did not call for the government to repeal the DST, instead advocating for it to repeal the Impact Assessment Act, the industrial carbon tax, the electric vehicle mandate and a number of other laws that could prevent businesses from flourishing in Canada.
Disappointed that trade talks have halted. Hopefully they resume quickly. As always, Conservatives are ready to help get a good deal for Canada. We must put Canada First.
— Pierre Poilievre (@PierrePoilievre) June 27, 2025
At the same time, the government must take emergency action to bolster Canada’s economy:
Fully repeal the…
Earlier this month, Finance Minister François-Philippe Champagne said his government was moving ahead with the tax even though it remained an irritant with the United States.
“That’s the law in Canada. We had fairly long, extensive discussions at the G7 about the different regimes that you find in different parts of the world. That’s not unique to Canada, by the way,” he said.
Trump accused Canada of “copying” the European Union (EU), which has many countries that also have a digital services tax in place.
The EU is also in talks with the U.S. to avoid so-called “reciprocal tariffs” of up to 50 per cent. Trump issued a deadline of July 9 to strike a deal but said in a press conference on Friday he could decide to extend the deadlines or make them shorter if he wanted to.
Trump said he has already made deals with a handful of countries on the world stage, including China and the United Kingdom, and was in the process of making some others.
“But some will be disappointed because they’re going to have to pay tariffs,” he said.
More details to follow…
— With files from Bloomberg.
National Post
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