President Donald Trump pulled the plug on all trade negotiations with Canada on Friday, slamming the country’s new digital services tax as a “direct and blatant attack” on the United States. He warned that retaliatory tariffs on Canadian imports would be announced within the week.
The decision marks a sharp shift in U.S.-Canada relations and a major blow to recent efforts aimed at restoring trade cooperation. Trump’s announcement came just days before Canada’s 3% digital tax is set to hit major American companies.
Retroactive Tax Could Cost U.S. Firms Billions
The Canadian tax, which takes effect Monday, applies to revenue generated from Canadian users by U.S.-based digital giants including Amazon, Google, Meta, Uber, and Airbnb. What has Washington especially fired up is the tax’s retroactive reach — it could force U.S. firms to fork over roughly $2 billion for past activity.
Trump drew a hard line, accusing Canada of copying the European Union’s hostile stance toward American innovation. “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. “Thank you for your attention to this matter!”
As CNBC reports:
The office of Canadian Prime Minister Mark Carney did not immediately respond to CNBC’s request for comment.
The president’s angry declaration suddenly imperils America’s trade relationship with a close ally that has long been one of its top two global trading partners.
U.S. goods trade with Canada totaled roughly $762 billion last year, according to the office of the U.S. trade representative.
Dairy Tariffs Back in the Crosshairs
Trump also reignited a long-standing grievance: Canada’s protectionist dairy policies. He cited tariffs as high as 400% on U.S. dairy products that have affected U.S. farmers for years. The message was unmistakable — Ottawa’s trade behavior is back under the microscope.
Markets React, China Deal Looms in the Background
The Canadian dollar dropped 0.7% against the U.S. dollar following the announcement, signaling investor concern over rising trade friction. Meanwhile, the White House is also juggling delicate negotiations with China. A tentative framework between the U.S. and Beijing is in place, aimed at reducing tensions after both sides accused each other of breaking a previous deal.
That agreement remains fragile. Key issues — tariffs, export controls, and enforcement — are still unresolved. But for now, Trump appears to be turning his full attention north, with a clear message to Ottawa: back off American tech — or face the consequences.
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