Trump Ends Trade Talks With Canada, Threatens to Set Tariff

President Donald Trump said he was ending all trade discussions with Canada after claiming the country moved to implement a digital services tax, and threatened to impose a fresh tariff rate within the next week.

“Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately. We will let Canada know the Tariff that they will be paying to do business with the United States of America within the next seven day period,” Trump posted Friday on social media.

The Canadian dollar dropped more than 0.5% almost immediately. Canada’s benchmark equity index fell, and the shares of companies that rely on trade across the border, including General Motors Co. and apparel maker Canada Goose Holdings Inc., also took a hit.

Canadian Prime Minister Mark Carney’s office and the country’s finance ministry did not immediately respond to requests for comment.

Dozens of countries face a July 9 deadline for Trump’s higher tariffs to kick back into place, and have been engaged in negotiations with the US. That group does not include Canada and Mexico. The president imposed tariffs the US’s North American neighbors earlier this year over fentanyl trafficking and migration concerns and talks with them are being handled on a separate track.

US Treasury Secretary Scott Bessent on Thursday announced a deal with Group of Seven allies that will exclude US companies from some taxes imposed by other countries in exchange for removing the Section 899 “revenge tax.” However, the deal didn’t address digital services taxes placed on large technology firms by some countries, which are opposed by Trump and his officials.

Canada is poised to proceed with implementing its new digital tax, with the first payments due Monday, the country’s finance department said earlier Friday. Business groups in the country have opposed the levy, arguing it would increase the cost of services and invite retaliation by the US.

A group of 21 US lawmakers wrote to Trump earlier this month asking him to push for the tax’s removal, estimating it will cost American companies $2 billion. Trump in his trade push has long railed against taxes and other non-tariff barriers, casting them as an impediment to US exporters.

The Canadian digital services tax, which is similar to one implemented by some other countries including the UK, is equal to 3% of the digital services revenue that a firm makes from Canadian users above C$20 million ($14.6 million) in a year. It would apply to companies including Meta Platforms Inc. and Alphabet Inc.

However, Canadian Finance Minister Francois-Philippe Champagne suggested to reporters last week that the digital tax may be renegotiated as part of US-Canada trade discussions.

“Obviously, all of that is something that we’re considering as part of broader discussions that you may have,” he said.