Washington D.C., June 28, 2025 — The already strained US‑Canada trade relations took a sharp downturn as President Donald Trump abruptly ended trade talks with Canada. The move came in direct response to Canada’s new Digital Services Tax (DST), which the U.S. claims unfairly targets American tech giants.
In a post on Truth Social, Trump called Canada a “very difficult country to trade with” and accused it of “discriminatory taxation practices” against companies like Google, Amazon, Meta, Apple, and Microsoft.
“Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately,” Trump declared.
$2.7 Billion in Back Taxes Fuel Dispute
Canada’s Digital Services Tax, recently enacted but retroactive to 2022, mandates major tech companies to pay 3% on certain online revenues generated from Canadian users. U.S. firms alone may owe an estimated $2.7 billion in back payments starting next week.
This development was branded by Trump as a “non-tariff trade barrier” and triggered an immediate halt to all negotiations. He also warned that new tariffs on Canadian goods would be announced within seven days, intensifying concerns across North American markets.
🇨🇦 Canada Responds to Escalation
Canadian Prime Minister Mark Carney has not yet issued a full response. However, insiders suggest Ottawa may reconsider the DST policy to avoid broader economic consequences. A statement is expected soon from Canada’s finance ministry.
The Canadian government initially justified DST as part of its broader digital tax framework, aligned with OECD guidelines. But U.S. officials argue that it unfairly targets foreign entities, particularly American firms, undermining the spirit of USMCA trade agreements.
Global Implications
This breakdown comes just weeks after trade representatives from both nations held positive discussions. Analysts now fear this could evolve into a full-blown trade war unless cooler heads prevail.
