US President Donald Trump issued a statement on Friday that his administration is putting trade talks with Canada on hold due to frustration with Canada’s digital tax aimed at big US tech firms. Trump characterized the Canada tax as “egregious” in a posting on his Truth Social platform and said all trade talks with Ottawa would be stopped immediately.
“Due to this outrageous tax, we are immediately terminating ALL talks on Trade with Canada.”, Trump said. He also threatened to inform Canada within a week of a new rate of tariffs, which he called Canada “very difficult” to negotiate with.
The action follows increasing tensions between the two nations over Canada’s digital services tax imposed in 2023. Officials from the US have raised alarm over the impact of the tax on American businesses, and talks on dispute settlement began last year. The Computer & Communications Industry Association reported that US digital services providers would remit billions of taxes to Canada by June 30.
Canada had yet to face some of Trump’s more general trade actions, such as a broad 10% tariff imposed in April that covered most other countries with which the US trades. Yet Canada has endured its own list of targeted trade restrictions.
Since coming back to the office in January, Trump has rolled back duties on several imports, ranging from steel and aluminum to cars. Most recently, Washington doubled 25% tariffs on Canadian steel and aluminum to 50%. In retaliation, Ottawa said it would update its 25% retaliatory tariffs on US metals if a trade deal is not within 30 days.
The new trade war brings the tensions between two of North America’s biggest economies to a boiling point and has the potential to complicate cross-border economic relations already tense due to earlier disputes throughout Trump’s first term in office.