Trump Terminates All Trade Talks With Canada Over Its 3% Digital Services Tax

On June 27, 2025, Trump announced on Truth Social that 'based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately,' calling Canada's digital services tax 'a direct and blatant attack on our country.' He said the United States would inform Canada of the tariff it would pay 'within the next seven day period.' The Canadian levy, enacted in 2024, imposed a 3% charge on digital services revenue earned from Canadian users by firms with more than C$20 million in such revenue, and applied retroactively to 2022, with an estimated initial bill of roughly $2 billion for affected U.S. technology companies. Its first collections were due June 30.

Breaking off negotiations with the largest U.S. trading partner over a tax on a handful of American firms illustrated the pattern of using tariff threats as leverage on domestic policy choices of allied governments.

Canada rescinded the tax hours before it was to take effect, and Prime Minister Mark Carney and Trump agreed to resume talks with a target of reaching an agreement by July 21, 2025.