President Donald Trump announced Friday he is ending trade talks with Canada over the northern neighbor’s decision to impose a digital service tax on American technology companies.
Trump called Canada’s decision “a direct and blatant attack on our Country” in a Truth Social post.
“They are obviously copying the European Union, which has done the same thing, and is currently under discussion with us, also. Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately,” Trump also wrote.
Canada is reportedly going ahead with the tax despite its inclusion in the Group of Seven (G7) agreement in which President Trump agreed to remove Section 899, also known as the revenge tax proposal, from his “Big Beautiful” tax bill, according to Bloomberg. (RELATED: Trump FDA Reveals Canada Will Play Major Role In Bringing Drug Prices Down)
The tax will require digital services companies like Meta to pay 3 percent of the digital services revenue they make on Canadian users above 20 million Canadian dollars ($14.6 million) in a calendar year, according to Bloomberg.
Canada’s tax will apply retroactively to 2022 and the country’s Finance Department says the first payments will be due from digital companies Monday, Bloomberg reported.
Canadian Finance Minister Francois-Philippe Champagne hinted that the tax may be a potential piece of leverage in trade negotiations.
“Obviously all of that is something that we’re considering as part of broader discussions that you may have,” he told Bloomberg.
Trump concluded his Truth Social post with indications that the U.S. will retaliate.
“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 wrote.
