Donald Trump has abruptly terminated all trade talks with Canada in retaliation for its digital services tax, threatening retaliatory tariffs and destabilizing the continent’s largest trade relationship.
At a Glance
- Canada’s 3% digital services tax affects major U.S. tech firms.
- Trump ended all trade negotiations in protest on June 27.
- The U.S. will announce retaliatory tariffs within seven days.
- Canadian officials insist they will continue to seek resolution.
America Hits Back
In a fiery Truth Social post, Donald Trump declared that all trade negotiations with Canada are over, citing what he called a “blatant attack” by Ottawa’s digital services tax. The 3% levy, retroactive to January 1, 2022, targets revenue from digital giants like Google, Amazon, Meta, Uber, and Airbnb if their Canadian earnings exceed C$20 million annually.
Set to take effect on June 30, the tax drew bipartisan condemnation in Washington. Trump, however, moved unilaterally, vowing that “tariffs are coming” within a week. The U.S. Trade Representative may soon launch a Section 301 investigation—typically used to justify retaliatory trade measures—into the policy’s fairness.
Watch a report: Trump Terminates Canada Talks Over Tech Tax.
Billions at Stake
The escalation puts nearly US$760 billion in bilateral goods trade at risk. Canada is the United States’ largest export destination and a linchpin in countless supply chains. Disruption at this scale could hammer everything from lumber to autos. The market reaction was swift, with major U.S. indices wobbling before closing near record highs.
Canada’s government, under Prime Minister Mark Carney, is not backing down. Officials have reiterated that they will continue talks despite Trump’s stance. Business groups north of the border, however, have issued warnings that retaliatory U.S. tariffs could trigger “substantial economic fallout”, particularly for Canadian exporters in steel, dairy, and manufacturing.
A Global Flashpoint
This isn’t just a North American scuffle—it’s a piece of a larger global standoff. Digital services taxes have proliferated across Europe, Asia, and Latin America as governments try to tap tech giants’ revenue. The United States has long opposed such levies, arguing they unfairly single out American firms.
As the OECD’s Inclusive Framework tries to hammer out a global tax standard, Canada’s move could either accelerate consensus or fracture cooperation. Trump’s aggressive stance, meanwhile, revives memories of his first-term trade battles with China, Mexico, and the EU—battles that rattled markets and reshaped global commerce.
If retaliatory tariffs take effect, Canada may find allies in Europe and beyond. But with the U.S. election season heating up, Trump’s latest salvo could be as much about campaign optics as trade justice. The result? A high-stakes showdown with few offramps—and massive consequences for the global tech economy.
