Trump Ends Canada Talks Over Digital Tax, Threatens Tariffs

President Donald Trump announced that the US would immediately end negotiations with Canada in response to the country’s digital services tax on technology companies. The move was made in retaliation for Canada’s digital services tax targeting tech firms, which Trump described as a “direct and blatant attack” on the US. The announcement was made via a post on Truth Social, where Trump emphasized that the tax was unfair and justified the termination of discussions. He added that Canada would be notified within a week about the tariffs it will be required to pay to continue trading with the US.

Trump’s decision to end negotiations with Canada has sparked debate among individuals. Throughout his presidency, Trump had frequently denounced Digital Service Taxes (DSTs), referring to them as “non-tariff trade barriers.” Canada’s new DST is scheduled to come into force on Monday, June 30, and will be retroactive to 2022. DSTs allow countries to impose taxes on online services, unlike taxes that are applied to physical goods. This enables countries to collect revenue from big companies that do business online, even if the business is unprofitable. DSTs particularly target American companies, especially giant technology firms like Meta, Apple, Google, Amazon, and Microsoft.

Ending the negotiations, which have gone on for months, has raised individual debates. Critics of the Trump administration have pointed out that this move demonstrates a rising threat to global trade, further burdening the sector and putting pressure on industries like automobiles, agriculture, and energy. They have also predicted that retaliatory tariffs are likely on the way, meaning small and mid-sized businesses and supply chains will be the first to feel the impacts. In the meantime, markets are holding steady for now, but the uncertainty is growing, and a further escalation in tensions could change people’s feelings about the situation. The question that runs in almost everyone’s mind is: “Will this lead to a bigger conflict over technology and tariffs, or will it bring them back to negotiations?”

Trump describes DSTs as an unfair act against the US. Earlier this year, President Trump ordered his top trade official to resume trade investigations on tariffs on products imported from countries that charge digital service taxes on American tech firms. A White House official described the order, saying Trump told his administration to explore countermeasures such as tariffs against DSTs, fines, practices, and policies from foreign countries that target American companies. Based on the official’s statement, President Trump will not permit foreign governments to take advantage of America’s tax system for their own gain. The memo instructed the US Trade Representative’s office to restart investigations into digital service taxes that began during Trump’s first term. Moreover, it required the representative to look into other countries that impose a digital tax to unfairly target US companies.

Notably, countries including Britain, France, Italy, Spain, Turkey, India, Austria, and Canada have implemented taxes on the revenue generated by digital service providers operating within their borders. “What they are doing to us in other countries is terrible with digital,” Trump said to reporters before signing his memo. He previewed the move, saying he would impose tariffs on goods from Canada and France because of their digital service taxes. At the time, a White House fact sheet said each raised more than $500 million annually in DST revenues, with worldwide levies topping $2 billion.