Trump Says Trade Talks With Canada Are Over Because Of Digital Services Tax

Key Takeaways

• President Donald Trump said he was ending trade talks with Canada over the latter country's adoption of a digital services tax that affects tech companies, including American ones.
• Trump called the tax "a direct and blatant attack on our Country" in a social media post.
• Trump's announcement escalated the trade war between the U.S. and its northern neighbor, which he has waged on and off since February.

President Donald Trump upended the outlook for trade policy again Friday when he said he was ending negotiations with Canada due to the country's adoption of a Digital Services Tax.

Canada's tax, which charges digital companies for the revenue they collect from Canadian users, has been a contentious issue since it went into effect in 2024. In a social media post, Trump called the tax a "direct and blatant attack on our Country" that hurts U.S. technology companies. Digital taxes have also been a sticking point in trade talks between the U.S. and the European Union.

Trump's announcement came hours after Canada reportedly said it was proceeding with collecting the tax despite an agreement between the countries of the G7 (Canada, France, Germany, Italy, Japan, and Great Britain) to exclude U.S. companies from certain taxes. U.S. negotiators reportedly agreed to the deal in exchange for the U.S. legislators taking a "revenge tax" section out of the "One Big Beautiful Bill" legislation currently being debated in Congress.

Trump and his Canadian counterparts have clashed over multiple trade-related issues since he took office.

Trump set off a trade war with Canada in February when he imposed a 25% tax on imports from the country, but tensions eased somewhat after he removed those duties from items subject to previous trade agreements.

It is unclear how the termination of trade talks will affect the amount of tariffs charged on Canadian products shipped to the U.S.

"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 [sic]," Trump wrote in his social media post.

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