President Donald Trump has announced an immediate suspension of all trade negotiations with Canada, following Ottawa’s decision to implement a digital services tax. The Canadian government’s policy, retroactive to 2022, imposes a 3 per cent levy on revenue from digital platforms operating in Canada, such as Facebook, Instagram and X (formerly Twitter). The move could cost major US tech firms up to $2 billion in backdated payments, prompting Trump to accuse Canada of launching a “direct and blatant attack” on American technology companies.
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Posting on Truth Social, the president condemned the policy, comparing it to measures taken by the European Union, and insisted the US would retaliate with new tariffs on Canadian goods within seven days. Trump claimed, without evidence, that these tariffs would be paid by the Canadian government, rather than by US importers and consumers. He described the tax as “egregious” and declared all trade discussions with Canada “terminated”. Speaking later at a White House ceremony, he expressed frustration over what he described as Canada “trying to copy Europe” and warned of “economic power” the US holds over its northern neighbour.
The president also criticised the EU’s regulatory stance towards American firms, alleging that European courts were unfairly penalising US companies and calling European regulators “nasty people”. He claimed that only the US should be allowed to fine American companies and repeated his long-standing – and incorrect – assertion that the EU was formed to take advantage of the United States. Trade negotiations with European Commission President Ursula von der Leyen, he added, had become increasingly difficult due to planned tax measures on digital firms.
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Trump’s declaration came shortly after a letter from US lawmakers urging swift action against what they described as an “unprecedented, retroactive tax” by Canada. They warned such a move could set a damaging precedent in global tax and trade policy. Despite a previous agreement between Trump and Canadian Prime Minister Mark Carney to reach a new trade deal by late July, tensions have escalated. Ottawa is also lobbying for the removal of existing US tariffs on steel, aluminium and automobiles, which Trump claims were imposed to pressure Canada over its role in fentanyl trafficking. Legal challenges to the tariffs remain unresolved.
