Trump ends trade talks with Canada over a digital services tax

President Donald Trump said the US is ending trade talks with Canada, effective immediately, over a tax on digital services that will impact American tech companies. He also pledged to announce further tariffs on Canada within the next week, adding in a Truth Social post that “they will be paying to do business with the United States of America.”

Canada’s digital services tax (DST) is set to take effect on June 30, though it will be applied retroactively. According to The New York Times, US companies are preparing to pay around $2.7 billion to the Canadian government to cover a three percent tax on revenue they generated from users in the country. Companies including Amazon, Google, Meta, Uber and Airbnb are subject to the levy, as things stand.

In his post on Friday, Trump called the DST “a direct and blatant attack on our country.” Amid trade talks with the US, Canada’s finance minister, François-Philippe Champagne, said this month that the country had no plans to hit the pause button on the DST. Trump and Prime Minister Mark Carney previously said they aimed to reach a trade deal by around July 20.

Since taking office in January, Trump has been using tariffs as a negotiating tactic with other nations. The US reached a trade deal with China over rare earth minerals this week, and it is soon set to reimpose some of the levies that were put on hold in April for 90 days.

The DST has been a bone of contention between the US and Canada for years. The Biden administration formally challenged the levy last year under the United States-Mexico-Canada Agreement.

Other jurisdictions have considered or enacted a similar tax. It was reported in May that Germany is mulling a 10 percent levy on platforms such as Google and Facebook.