Washington D.C., June 28, 2025 — Tensions rose as President Donald Trump abruptly ended trade talks with Canada. The decision followed Canada’s new Digital Services Tax (DST), which targets American tech giants unfairly, according to the U.S. US‑Canada talks collapse over digital services tax
On Truth Social, Trump called Canada a “very difficult country to trade with”. He accused it of “discriminatory taxation practices” against companies like Google, Amazon, Meta, Apple, and Microsoft.
“Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately,” Trump declared.
$2.7 Billion in Back Taxes Fuel Dispute
Canada’s Digital Services Tax, recently enacted but retroactive to 2022, requires major tech companies to pay 3% on certain online revenues from Canadian users. U.S. firms might owe an estimated $2.7 billion in back payments starting next week.
Trump labeled this tax a “non-tariff trade barrier” and halted all negotiations immediately. He also warned about new tariffs on Canadian goods that would come within seven days. This move has stirred concerns across North American markets.
🇨🇦 Canada Responds to Escalation
Canadian Prime Minister Mark Carney has not yet responded fully. However, insiders suggest Ottawa might reconsider the DST policy to avoid bigger economic fallout. A statement from Canada’s finance ministry is expected soon.
The Canadian government initially justified DST as part of a wider digital tax, aligned with OECD guidelines. However, U.S. officials argue it unfairly targets foreign entities, especially American companies, undermining the spirit of USMCA trade agreements.
Global Implications
This conflict arises just weeks after promising talks. Analysts now fear it could escalate into a trade war, unless cooler heads prevail.
