CNN
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President Donald Trump ceased trade talks with Canada and will soon announce a new tariff rate the country will have to pay, he said in a Truth Social post on Friday.
The decision to end negotiations, which have been ongoing for several months, came after Canada announced a digital service tax, Trump said, calling it “a direct and blatant attack on our Country.”
“Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately. 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,” he said.
Digital services taxes are a way for countries to tax online services, in contrast to taxes on physical products. Countries with these taxes can collect revenue from large companies that operate online — even if the business is unprofitable. American firms, especially Big Tech companies such as Meta, Apple, Google, Amazon and Microsoft, are disproportionately affected by DSTs, according to a report published last year by the nonpartisan Congressional Research Service.
Trump has taken particular issue with DSTs throughout trade negotiations with other countries, commonly referring to them as “non-tariff trade barriers.” Canada has a new DST that is set to take effect on Monday that will be retroactive to 2022.
Canada is the top buyer of American goods, importing $349 billion worth last year, according to Department of Commerce data. Meanwhile, Canada shipped $413 billion worth of goods to the US last year, the third-highest source of foreign goods.
Levying higher tariffs on Canada would likely cause the country to retaliate by imposing higher tariffs on American goods. That would take a toll on both countries’ economies.
This is a developing story and will be updated.
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