On the 27th, US President Trump announced on social media that, due to Canada’s insistence on introducing a digital services tax targeting US technology companies, the US has decided to immediately halt all trade negotiations with Canada.
He criticized Canada for "imitating" a similar approach by the EU, calling it a "direct and blatant attack" on the US.
He stated that the US will notify Canada of the tariffs applicable to trade with the US within 7 days.
On the 26th, Canada’s Finance Minister Chrystia Freeland announced that Canada would not delay its plan to impose a digital services tax on technology companies, which will take effect from June 30.
According to the plan, the Canadian government will impose a 3% tax on the revenue that technology companies earn from providing digital services to Canadian users or from selling Canadian users’ data, and this tax will be retroactive to the companies’ revenues from 2022.
Currently, the US is in negotiations with Canada and other trading partners in an attempt to reach an agreement before the deadline set by Trump. The US has consistently opposed Canada’s plan to impose a digital services tax and has tried to apply pressure to block it.
On April 2, Trump announced the so-called "reciprocal tariffs", causing a sharp drop in US financial markets. After significant pressure from multiple parties, Trump announced on April 9 a 90-day postponement of high "reciprocal tariffs" for some trading partners, but maintained a 10% "base tariff", while warning trade partners that negotiations with the US must be completed by July 8.