Fri Jun 27 18:41:53 UTC 2025: ## Trump Halts Trade Talks with Canada Over Digital Services Tax
**Washington D.C.** – In a dramatic escalation of trade tensions, former U.S. President Donald Trump has announced an immediate halt to trade negotiations with Canada over its recently implemented digital services tax. The move comes just days before the first payments of the 3% tax, levied on the digital revenue of large technology companies operating in Canada, are due.
Trump, in a post on his Truth Social platform, labeled the tax a “direct and blatant attack on our country,” vowing to impose tariffs on Canadian goods within seven days. “Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately,” he declared.
The Canadian Digital Services Tax Act, approved in June, imposes a 3% levy on digital services revenue earned in Canada by companies exceeding 20 million Canadian dollars (approximately $14.6 million USD) annually. The tax is retroactive to 2022, with collections set to begin on Monday.
Canadian businesses have voiced concerns about the tax, arguing it will increase costs and provoke retaliation from the U.S. The Canadian government has so far resisted calls to pause the tax implementation.
Finance Minister Francois-Philippe Champagne had recently suggested the digital tax could be part of ongoing trade discussions with the U.S. However, Trump’s announcement casts doubt on the future of those discussions and a potential trade deal expected in July.
In response, the Canadian government issued a brief statement affirming its commitment to engaging in negotiations with the U.S. in the best interests of Canadian businesses and workers.
Experts view Trump’s actions as a pressure tactic, similar to those employed during his previous administration. Vina Nadjibulla, Vice President of Research and Strategy at the Asia Pacific Foundation of Canada, stated, “This is definitely escalation from Trump… Canada will need to work behind the scenes to find an off-ramp without giving into his demands.” Nadjibulla also emphasized the need for Canada to coordinate its response with the European Union, which faces similar trade pressures from the U.S. regarding digital taxes.
Rachel Ziemba, Adjunct Senior Fellow at the Center for a New American Security, called Trump’s declaration “unfortunate but not surprising,” suggesting it also serves as a warning to the EU.
The imposition of tariffs on Canadian goods is expected to negatively impact both economies. Canada is the second-largest trade partner of the U.S., with significant trade volumes in both directions. Canada has already been impacted by Trump’s tariffs on steel, aluminum, and auto parts. The Canadian economy is experiencing a slowdown, with unemployment currently at 7 percent.
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