United States President Donald Trump on Friday said that he is calling off trade talks with Canada citing its latest tax policy impacting US tech firms. He added that Ottawa will learn their new tariff rate within a week.
"Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately," Trump said in a post on his Truth Social platform.
“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,” he added.
Trump referred to Canada’s Digital Service Tax Act which was enacted on June 20, 2024. According to the act, the Canadian government will levy a three percent tax on the digital services revenue a firm makes from Canadian users above 20 million Canadian dollars ($14.6m) in a calendar year.
The Canadian government has so far refused to withdraw the new act with its implementation set to commence on Monday. It will cover revenue retroactively from 2022.
Both the nations were working on a trade deal to be in place by mid-July. Last week, Canadian Prime Minister Mark Carney asserted that Canada will adjust its 25% counter tariffs on U.S. steel and aluminium if a bilateral trade deal was not reached in 30 days, in response to doubling of U.S. levies on the metals to 50%. Carney’s office issued a statement on Friday stating that, “The Canadian government will continue to engage in these complex negotiations with the United States in the best interests of Canadian workers and businesses.”
U.S. Treasury Secretary Scott Bessent told CNBC that Washington had hoped that the Canadian government would halt the tax “as a sign of goodwill.”
