President Trump has slammed the brakes on trade talks with Canada—again. And this time, it’s all about a tech tax.
On Friday, Trump announced that the U.S. would suspend all negotiations with Canada after it confirmed plans to go ahead with a 3% digital services tax. The tax, set to hit companies like Amazon, Google, Meta, and Airbnb, is expected to take effect Monday. It’s retroactive too—meaning U.S. tech firms will owe Canada around $2 billion.
“A direct and blatant attack on our country,” Trump said in a fiery post on his social network.
He didn’t stop there. Trump promised to reveal new tariffs Canada will face within a week. He made it clear: if Canada taxes U.S. tech, the U.S. will hit back harder.
A Rocky Road with Canada
Since his second term began, Trump’s trade relationship with Canada has been anything but smooth. He’s taken jabs at the country, even joking that Canada should be absorbed as a U.S. state.
Talks had recently resumed, with both sides setting a 30-day deadline during the G7 Summit in Alberta. But with Canada standing firm on its tax, Trump walked away.
“We’d rather not use our economic power,” he said from the Oval Office. “But we will.”
Canadian Prime Minister Mark Carney responded calmly. “It’s a negotiation,” he said. But with 80% of Canada’s exports going to the U.S., the pressure is on.
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What the Tax Is About
Canada’s Digital Services Tax Act has been in the works for over a year. It targets companies making money from online users in Canada. While many European countries have introduced similar taxes, the U.S. sees this one as discriminatory—because it mainly affects American firms.
“This has been a brewing issue,” said Daniel Beland, a professor at McGill University. Source: CNBC
What’s Next?
Trump already has steep tariffs in place—50% on steel and aluminum, 25% on cars, and 10% on most other imports. He’s also used tariffs on Canada and Mexico to target fentanyl smuggling, though some goods are still protected under the USMCA deal from his first term.
With this new blow-up, expect new tariffs soon—and more drama to follow.
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