US president Donald Trump said he was suspending trade talks with Canada over its plans to continue with a tax on technology firms, which he called “a direct and blatant attack on our country”.
Mr Trump, in a post on his Truth Social platform, said Canada had just informed the US it was sticking to its plan to impose the digital services tax, which applies to Canadian and foreign businesses that engage with online users in Canada. The tax is set to go into effect on Monday.
“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,” Mr Trump said.
His announcement was the latest move in the trade war he has launched since taking office for a second term in January. Relations with Canada have been turbulent since then, with Mr Trump repeatedly suggesting its neighbour would be absorbed as a US state.
Canadian prime minister Mark Carney said on Friday that his country would “continue to conduct these complex negotiations in the best interests of Canadians”.
“It’s a negotiation,” he added.
Mr Trump later said he expected that Canada would remove the tax.
“Economically we have such power over Canada. We’d rather not use it,” Mr Trump said in the Oval Office. “It’s not going to work out well for Canada. They were foolish to do it.”
When asked if Canada could do anything to restart talks, he suggested Canada could remove the tax, and predicted it would, but added: “It doesn’t matter to me.”
Mr Carney visited the White House in May. Mr Trump last week travelled to Canada for the G7 summit in Alberta, where Mr Carney said the two countries had set a 30-day deadline for trade talks.
The digital services tax will hit companies including Amazon, Google and Meta with a 3 per cent levy on revenue from Canadian users. It will apply retroactively, leaving US companies with a $2 billion (€1.7 billion) bill due at the end of the month.
“We appreciate the Administration’s decisive response to Canada’s discriminatory tax on US digital exports,” said Matt Schruers, chief executive of the Computer & Communications Industry Association.
Talks have been taking place on easing a series of steep tariffs Mr Trump imposed on goods coming from Canada. He on Friday told reporters the US was preparing to send letters to different countries, informing them of the new tariff rate his administration would impose on them.
Mr Trump has imposed 50 per cent tariffs on steel and aluminium as well as a 25 per cent levy on cars. He is also charging a 10 per cent tax on imports from most countries, though he could raise rates on July 9th, when the 90-day negotiating window he set expires.
Canada and Mexico face separate tariffs of as much as 25 per cent that Mr Trump put into place under the auspices of stopping fentanyl smuggling, though some products are still protected under the 2020 US-Mexico-Canada Agreement signed during Mr Trump’s first term.
Addressing reporters after a private meeting with Republican senators on Friday, US Treasury secretary Scott Bessent declined to comment on news that Mr Trump had ended trade talks with Canada.
“I was in the meeting,” Mr Bessent said before moving on to the next question.
About 60 per cent of US crude oil imports are from Canada, and 85 per cent of US electricity imports as well. Canada is also the largest foreign supplier of steel, aluminium and uranium to the US and has 34 critical minerals and metals that the Pentagon is eager to obtain.
About 80 per cent of Canada’s exports go to the US. - AP
