Trump declares an end to trade negotiations with Canada due to levy imposed on technology companies.
Updates on the Tense Canada-US Trade Negotiations
WASHINGTON (AP) - Tensions between Canada and the U.S. reached a peak in mid-2025 as President Donald Trump pulled the brakes on trade talks in response to Canada's plans to implement a digital services tax (DST) on technology giants.
Trump, via his social media network, called out Canada for its move, labeling it a "direct and blatant attack on our country." The tax, set to take effect on Monday, would apply to Canadian and foreign companies engaging with online users in Canada, including big players like Amazon, Google, Meta, Uber, and Airbnb, with a 3% levy on their revenue.
In response, Trump declared an immediate end to all discussions on trade with Canada, threatening a new tariff within the next seven days. The President cited the egregious nature of the digital services tax as the root cause.
The ongoing trade war between the two nations began early in Trump's second term. Progress in the negotiations was roller coaster-like, starting with the President repeatedly hinting at absorbing Canada as a U.S. state.
Canadian Prime Minister Mark Carney, however, remained unfazed and maintained that Canada would continue to conduct negotiations in the best interests of its citizens, describing it as "a negotiation." Nevertheless, Trump predicted Canada would remove the tax and expressed hope for its removal.
Prior to Trump's announcement, the two leaders had had face-to-face encounters, with Carney visiting the White House in May and Trump attending the G7 summit in Alberta in June. During these meetings, the leaders had set a 30-day deadline for trade talks.
In the world of tech giants and trade battles, Canada's digital services tax indeed stirred controversy and worry. Industry experts argues that the tax unfairly discriminates against American companies, risking the vitality of the bilateral economic relationship.
The digital services tax marks a source of tension between Canada and the U.S. for a while, as it focuses on multinational digital corporations like U.S.-based tech giants. With Canada moving forward with the tax in the midst of trade negotiations, the specter of retaliatory measures looms over the trading relationship.
___
Gillies reported from Toronto. Associated Press writers Will Weissert, Joey Cappelletti, and Paul Wiseman in Washington contributed to this report.
Copyright 2025 The Associated Press. All rights reserved.
- The dispute over Canada's digital services tax added a political dimension to the ongoing general-news issue of Canada-US trade negotiations, as President Donald Trump used social media to condemn the tax as a direct attack on the U.S.
- The escalation of the digital services tax issue into a political battle further complicated the trade negotiations between Canada and the U.S., with Canadian Prime Minister Mark Carney remaining steadfast while President Trump threatened retaliatory measures.
