US President Donald Trump has said that the US will immediately end trade negotiations with Canada to pay the country's digital service tax on technology companies.
Announcing on the social network Truth Social on June 27, President Trump called Canada's tax rate "a direct and blatant attack on our country".
The US leader added: "Based on this unreasonable tax rate, we would like to end all trade discussions with Canada, effective immediately."
Mr. Trump also added that he would announce tariffs on Canada within the next 7 days.
Canada passed the Digital Services Tax Act on June 20, 2024 and took effect on June 28 of the same year. Accordingly, Canada will tax a companys digital service revenue from Canadian users at over 20 million Canadian dollars ($24.6 million) per year by 3%. Canada will start collecting taxes on June 30.
Last week, Canadian Finance Minister Francois- Philippe Champagne revealed that digital tax could be negotiated as part of trade talks between the US and Canada. Discussions are going well and a trade deal is expected to be reached in July.
The Canadian Prime Minister's Office issued a summary statement on June 27, affirming: "The Government of Canada will continue to participate in complex negotiations with the United States, in the best interests of Canadian workers and businesses."
Canada is the second largest trading partner of the US after Mexico. Last year, the country bought $349.4 billion in US goods and exported $412.7 billion. Canada has been hit by the steel and aluminum tariffs, as well as some car and auto parts issued by President Donald Trump. The Canadian economy has shown signs of slowing growth and the unemployment rate is at a high level of 7%.
