On Friday (local time), former US President Donald Trump announced that all trade negotiations with Canada would be halted immediately.
In a post shared on Truth Social, Trump criticized Canada as being “very difficult” to trade with and claimed that the recently introduced Digital Services Tax (DST) by the Canadian government was a deliberate attack on American businesses.
“We have just learned that Canada—a nation that’s long imposed tariffs up to 400% on American dairy—has now unveiled a Digital Services Tax aimed at US tech firms. This is a direct assault on our country. They appear to be mimicking the European Union, which is also under discussion with us,” Trump said.
Canada’s Digital Services Tax applies to both foreign and domestic companies that meet specific criteria and generate revenue through digital engagement with Canadian users, according to a statement from the Canada Revenue Agency.
Trump added that Canada would be notified within a week about the tariffs it will have to pay to access the American market.
“Due to this outrageous tax, we are ending all trade discussions with Canada effective immediately. We will inform them of the new tariffs within the next seven days,” he wrote.
CNN explained that DSTs enable governments to collect revenue from large digital firms regardless of their profitability. According to the Congressional Research Service, such taxes have disproportionately impacted American tech giants like Google, Amazon, Meta, Microsoft, and Apple.
CNN further reported that Trump has previously raised concerns about DSTs in trade talks with other countries, labeling them as non-tariff trade barriers. Canada’s new DST, set to take effect Monday, will be retroactive to 2022.
The New York Times highlighted that the 3% DST, in effect since last year, will see its first collections begin Monday. Because it applies retroactively, American tech companies are expected to pay around $2.7 billion to the Canadian government, as noted by a tech industry group.
