In yet another dramatic twist in the growing U.S.-Canada trade standoff, President Donald Trump announced Friday that his administration is “immediately ending all trade talks” with Canada — a bombshell move he says is in direct response to Canada’s controversial digital services tax.
📱💸 The tax, introduced by the Trudeau Liberals in 2021 and now implemented under Prime Minister Mark Carney, imposes a 3% levy on revenue earned by large tech companies from Canadian users. It only applies to firms with over $20 million in Canadian revenue, a policy critics — including many U.S. lawmakers — have long labeled “discriminatory” and anti-American.
In a post on Truth Social, Trump pulled no punches, calling the policy “a direct and blatant attack on the United States and its technology companies.” 💻
🔥 Trade War Escalates
Trump’s decision comes after months of tension between the two nations. Since February, the U.S. has slapped layers of tariffs on Canadian goods, targeting everything from lumber to agricultural exports. Canada retaliated with countermeasures, and despite high-stakes meetings — including one at the recent G7 summit in Kananaskis, Alberta — tensions have only intensified.
At the G7, Trump and Carney had committed to negotiating a new trade and security deal by mid-July. That now looks unlikely.
“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,” Trump posted ominously.
Behind closed doors in Ottawa, Carney held a closed to media meeting with his Council on Canada-U.S. Relations Friday morning. No public statement was issued.
⏰ Tax Bomb Drops Monday
The digital services tax is not new — but its first payment is due Monday, and it applies retroactively to 2022. U.S. tech giants like Google, Amazon, and Meta are among those on the hook.
American officials have warned for years that Canada risked triggering a trade rift by going ahead with the levy. Even the Biden administration’s trade representative, Katherine Tai, described the measure as “discriminatory.”
Back in December, former finance minister Bill Morneau urged the government to rethink the policy, telling CTV’s Question Period that it was “a clear obstacle” in dealing with Washington.
But the current finance minister, François-Philippe Champagne, isn’t budging. Asked if Canada might scrap the tax, he replied: “We’re not there at all.” Speaking in French, he emphasized the tax is “neutral” and not aimed at any one country.
💼 Business Leaders Sound the Alarm
Business leaders aren’t hiding their concern. In a statement to CTV News, Business Council of Canada CEO Goldy Hyder said his group has been calling on the government to abandon the tax for years.
“If we were bluffing, the bluff just got called,” Hyder said bluntly. “We’ve got till midnight Monday to get through this.”
He also pointed out that former finance minister Chrystia Freeland had already “booked the revenues” from the tax, meaning the government is counting on the money. The Parliamentary Budget Officer estimates the levy could bring in $7.2 billion over five years.
⚠️ What’s Next?
With Trump threatening more tariffs and the clock ticking on the first round of digital tax payments, Canada now finds itself in a dangerous position. The government must decide whether to hold the line and risk deeper economic fallout — or hit pause and try to bring the U.S. back to the table.
Either way, this is shaping up to be one of the most intense Canada-U.S. trade standoffs in recent memory. 🧨
