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Donald Trump said the US was “terminating” trade talks with Canada in retaliation against a new digital services tax on tech companies, reigniting a bitter North American trade war after months of détente.
“Canada, a very difficult Country to TRADE with . . . has just announced that they are putting a Digital Services Tax on our American Technology Companies, which is a direct and blatant attack on our Country,” the US president posted on his Truth Social platform on Friday.
“Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately,” Trump added.
The president said he would set a new tariff rate on Canadian imports “within the next seven day period”.
Friday’s announcement plunges the two nations back into a trade war, bringing an abrupt end to a period of more cordial relations that followed the election of Mark Carney as Canadian prime minister in March.
Carney — who was propelled to the premiership on a surge of anti-US sentiment — sought to reset relations with Washington that had grown strained under his predecessor Justin Trudeau. Early meetings between the pair proved friendly, but Trump’s outburst threatens to undo the progress.
“The Canadian government will continue to engage in these complex negotiations with the United States in the best interests of Canadian workers and businesses,” the prime minister’s office said.
The Canadian dollar fell on Trump’s statement as traders reacted to the fresh escalation of the trade dispute, leaving it down 0.7 per cent against the US dollar on the day. The S&P 500 also fell from its highs of the day, but the blue-chip index remained up about 0.3 per cent.
Canada hosted Trump at the G7 summit earlier this month. Following their talks, Carney posted on X that the two countries had “agreed to pursue negotiations towards a deal within the coming 30 days”.
Trump’s broadside comes after Canadian finance minister François-Philippe Champagne said this month that Ottawa was “going ahead” with plans for a digital services tax despite the misgivings of the Trump administration.
The measure would hit tech groups with a 3 per cent levy on revenue earned from Canadian users and has been opposed by Silicon Valley.
Foreign companies such as Meta, Netflix and Amazon, as well as local businesses, must file a return for the tax by the end of the month or face a fine.
Trump also hit out at Canadian agricultural policy, a long-standing area of contention between the countries dating back to the president’s first term.
“They have charged our Farmers as much as 400% Tariffs, for years, on Dairy Products,” he wrote in his Truth Social post on Friday.
Canada recently passed legislation on “supply management” measures to protect its dairy industry through price setting and production quotas — a system described by Trump in 2017 as a “disgrace”.
Trump’s return to office sparked a tit-for-tat trade war between Washington and Ottawa after he announced sweeping 25 per cent tariffs on Canadian goods. Those levies were later amended with carve-outs for goods covered by the USMCA trade deal, but new sectoral tariffs on steel and aluminium have hit Canada hard.
The trade acrimony — alongside the president’s threat to annex Canada as the 51st US state — has triggered a surge of resentment north of the border.
Canadian industry groups slammed the digital services tax on Friday and urged the government to scrap it in order to placate Trump.
“For many years, we have warned that the implementation of a unilateral digital services tax could risk undermining Canada’s economic relationship with its most important trading partner, the United States,” said Goldy Hyder, president of the Business Council of Canada. “That unfortunate development has now come to pass.”
