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The president said he would cease negotiations and impose new tariffs because of Canada’s imminent, new digital services taxes.
June 27, 2025Updated 4:21 p.m. ET
President Trump on Friday said that the United States would terminate all trade discussions with Canada, “effective immediately,” over the country’s plan to begin collecting digital services taxes from U.S. technology giants.
Mr. Trump described those taxes as a “blatant attack,” and promised on social media that he would inform Canada within the next seven days about the duties “they will be paying to do business with the United States of America.”
In ceasing talks, Mr. Trump once again upended the increasingly fraught relationship between the United States and Canada, which has traditionally been one of America’s closest allies and largest trading partners.
Those relations had seemed to be improving after Canada’s new prime minister, Mark Carney, took office. The two nations even appeared to be on track to announce a trade deal in July, having huddled at length earlier this month on the sidelines of the Group of 7 summit, which was hosted in Alberta.
A decision by Mr. Trump to follow through and increase tariffs on a North American neighbor could unleash chaos on both sides of the border, with U.S. companies and consumers facing the brunt of higher import costs. Financial markets briefly recoiled over the breakdown in negotiations, though the S&P 500 recovered and reached a new high Friday.
Canada’s 3 percent digital services tax has been in place since last year, but the first payments are only due beginning on Monday. Because the tax is retroactive, American companies were preparing to turn over roughly $2.7 billion to the Canadian government, according to a trade group for large American tech companies.
