U.S. President Donald Trump says he’s ending all trade discussions with Canada to hit back at Ottawa for slapping a tax on web giants — and he wants it removed before negotiations can begin again.
Canada and the U.S. have been locked in talks to get Trump to lift his punishing tariffs on Canadian goods, levies that have already led to major economic dislocations, job losses and a drop in southbound exports. Trump and Prime Minister Mark Carney agreed at the G7 last week to reach some agreement on the trade dispute within 30 days.
Speaking in the Oval Office on Friday afternoon, Trump said the U.S. has “such power over Canada,” and that he’s upset the country is following a taxation strategy similar to Europe’s.
“It’s not going to work out well for Canada. They were foolish to do it,” he said of imposing the DST, which was passed into law last year with a delayed application.
U.S. President Donald Trump says he’s pulling back from the bilateral trade discussions because Canada plans to move ahead with its digital services tax. The CBC’s Sam Samson discusses how much the tax will cost American companies.
“We’re going to stop all negotiations with Canada right now until they straighten out their act,” he said.
Asked if there’s anything Canada can do to appease him, Trump said Ottawa could remove the tax.
“They will,” he said. “They do most of their business with us. When you have that circumstance, you treat people better.”
Earlier Friday, Trump posted on social media he may impose some sort of blanket tariff on Canadian goods as retribution for the DST, which will primarily hit U.S. firms since it targets only the biggest earners.
Speaking briefly to reporters before Trump’s Oval Office comments, Carney said he hadn’t talked with Trump that day.
“We’ll continue to conduct these complex negotiations in the best interest of Canadians,” Carney said. He did not address a reporter’s question about whether his government is prepared to drop the DST — something the Business Council of Canada is calling on Ottawa to do in exchange for U.S. tariff relief.
Set to take effect on June 30, the DST would have U.S. companies like Amazon, Google, Meta, Uber and Airbnb pay a three per cent levy on revenue from Canadian users. The policy will apply retroactively, leaving U.S. companies with a $2-billion US bill due at the end of the month.
These global digital firms are often able to skirt paying taxes in the countries where they operate, and the last Liberal government pitched the DST as a way to bring the tax code up to date and capture revenues earned in Canada by firms located abroad.
U.S. long opposed DST
It’s been a bone of contention between Canada and the U.S. for years, with former president Joe Biden’s ambassador to Canada warning during his tenure that, if a DST was enacted, the U.S. would hit back.
While Canada and other Organization for…
Read More: Trump wants Canada’s digital services tax gone before trade talks resume
