US President Donald Trump announced on Friday, June 27, 2025, that the United States is immediately terminating all trade discussions with Canada, citing Canada’s new Digital Services Tax (DST) as the primary reason for this abrupt decision.

Trump described Canada as a "very difficult" country to trade with and labelled the DST as a "direct and blatant attack" on American businesses, particularly targeting major US technology firms such as Meta, Apple, Google, Amazon, and Microsoft.

The Canadian government’s DST, set at 3 percent, targets large foreign and domestic businesses earning revenue from online engagement with Canadian users. Although the tax has been in place since last year, the first payments—retroactive to 2022—are due beginning Monday.

This is expected to cost American tech companies approximately $2.7 billion in back taxes. Trump argued that the DST unfairly singles out US firms and accused Canada of copying similar measures introduced by the European Union.

In his statement, Trump also criticised longstanding Canadian tariffs on US agricultural products, specifically citing tariffs as high as 400 percent on dairy products, and asserted that such trade practices have disadvantaged American farmers for years.

He further warned that the US will notify Canada within seven days of the new tariffs it will face to do business with the US, signalling an escalation in trade tensions between the two countries.

The termination of trade talks marks a significant setback in US-Canada economic relations, as Canada is the largest importer of American goods and the third-largest source of US imports.

The move has raised concerns about potential disruptions to cross-border trade and economic fallout for both nations. Canadian officials, including Prime Minister Mark Carney, have responded by expressing a commitment to continue negotiations, emphasizing the importance of stable economic ties and the interests of Canadian workers and businesses.

Trump’s decision comes amid broader US efforts to challenge digital service taxes globally, which he has frequently labelled as "non-tariff trade barriers." The situation remains fluid, with both sides bracing for further developments as the US prepares to announce retaliatory tariffs and Canada stands by its policy, citing the need for fair taxation of digital giants operating within its borders.

Based On ANI Report