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(Bloomberg) — President Donald Trump said he was ending all trade discussions with Canada after claiming the country moved to implement a digital services tax, and threatened to impose a fresh tariff rate within the next week.
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“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,” Trump posted Friday on social media.
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Canada’s benchmark share index and currency both fell in the wake of Trump’s comments.
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Canadian Prime Minister Mark Carney’s office and the country’s finance ministry did not immediately respond to requests for comment.
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Dozens of countries face a July 9 deadline for Trump’s higher tariffs to kick back into place, and have been engaged in negotiations with the US. That group does not include Canada and Mexico. The president imposed tariffs the US’s North American neighbors earlier this year over fentanyl trafficking and migration and talks with them are being handled on a separate track.
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US Treasury Secretary Scott Bessent on Thursday said Group of Seven nations would pause their digital services taxes on US tech companies, in exchange for Republicans in Congress killing a “revenge tax” proposal on foreign investors. But it’s not clear US allies agreed to that arrangement. Canada is a G-7 member.
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Canada is poised to proceed with the tax anyway, with the first payments due Monday. Business groups in the country have opposed the levy, arguing it would increase the cost of services and invite retaliation by the US.
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A group of 21 US lawmakers wrote to Trump earlier this month asking him to push for the tax’s removal, estimating it will cost American companies $2 billion. Trump in his trade push has long railed against taxes and other non-tariff barriers, casting them as an impediment to US exporters.
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The Canadian digital services tax, which is similar to one implemented by some other countries including the UK, is equal to 3% of the digital services revenue that a firm makes from Canadian users above C$20 million ($14.6 million) in a year. It would apply to social media companies such as Meta Platforms Inc.
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However, Canadian Finance Minister Francois-Philippe Champagne suggested to reporters last week that the digital tax may be renegotiated as part of US-Canada trade discussions. “Obviously, all of that is something that we’re considering as part of broader discussions that you may have,” he said.
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—With assistance from Laura Dhillon Kane, Thomas Seal and Melissa Shin.
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(Updates with additional details, market data from third paragraph)
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English (US)