Trump ends all U.S. trade talks with Canada over digital services tax

Global Trade Instability and Conflicts Set to Dominate G7 Summit in Canada

preCharge News BUSINESS — In a fiery post on Truth Social Friday, President Donald Trump declared the United States is “terminating ALL discussions on Trade with Canada” in response to Canada’s decision to move forward with its digital services tax targeting American tech companies.

“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 said.

He added that Canada was “copying the European Union” and described the tax as “egregious.”

U.S.-Canada Trade Relationship Suddenly in Jeopardy

Trump Accuses Ottawa of Disrespect

Later on Friday in the Oval Office, Trump doubled down on his criticism.

“We have such power over Canada. They were foolish,” he said. “We’ll stop all negotiations with Canada right now until they straighten out their act.”

The Canadian government, led by newly installed Prime Minister Mark Carney, did not immediately comment on the U.S. president’s threats.

The escalation risks disrupting one of America’s most vital trade partnerships. In 2024, U.S.-Canada goods trade topped $762 billion, according to the Office of the U.S. Trade Representative.

Canada’s Digital Services Tax Sparks Major Diplomatic Fallout

Retroactive Tax Hits U.S. Tech Giants Like Amazon and Meta

Canada’s digital services tax, enacted last year, applies retroactively to 2022 and is scheduled to begin collecting payments on Monday.

The tax affects both foreign and domestic tech firms, but disproportionately hits American tech giants like Amazon, Google, and Meta.

Despite repeated protests from Washington, Canadian officials announced this month they would not pause or reconsider the law.

“Obviously, we think it’s patently unfair to do it retroactively,” said U.S. Treasury Secretary Scott Bessent on CNBC.

Bessent said the administration had hoped Canada would “put a brake on” the tax out of “goodwill.”

White House Eyes Section 301 Probe in Response

Trump Administration Moves Toward Retaliatory Action

According to Bessent, Trump’s trade representative, Jamieson Greer, is now preparing to initiate a Section 301 investigation under the Trade Act of 1974.

The investigation will seek to “determine the amount of harm” inflicted on the U.S. by Canada’s digital services tax.

Such investigations can lead to sweeping retaliatory tariffs, a tactic Trump has used in the past against China and France under similar digital tax disputes.

Markets React as Trade Fears Weigh on Wall Street

S&P 500 and Nasdaq Fall After Trump’s Announcement

After Trump’s abrupt declaration, the S&P 500 and Nasdaq Composite turned negative, pulling back from record highs reached earlier in the trading day.

Investors appeared rattled by the potential for a new U.S.-Canada trade war, especially one focused on tech, tariffs, and retaliation—three high-stakes areas in global markets.