Former President Donald Trump has yanked the United States out of trade talks with Canada, holding Ottawa accountable for imposing a retroactive tax on U.S. digital giants.
The move comes on the heels of Canada’s 3% digital services tax aimed at tech Goliaths like Amazon, Meta, and Google — a policy Trump says punishes American innovation and will now face real consequences.
The Washington Times reported that, declaring the trade negotiation door closed “immediately,” Trump made the announcement via Truth Social, firing the first policy shot in what could become a tariff-laden standoff between two longtime allies.
The Canadian tax applies to businesses with over $14.6 million annually in Canadian digital revenue and is retroactive to 2022 — a double whammy that’s irked American tech companies and drawn Trump’s fury.
Trump responded by threatening to slap new tariffs on Canadian imports within a week, asserting that Canadian firms will need to pay for the privilege of accessing the U.S. market moving forward.
The U.S. already imposes heavy duties on Canadian steel and aluminum at 50%, while autos face a 25% levy. A separate 25% tariff has also been reimposed recently despite the trade protections outlined in the USMCA agreement.
Canada’s new prime minister, Mark Carney, hasn’t responded to the latest salvo, but Canadian media reports suggest that national sentiment is intensifying in favor of his administration.
The spat has sparked a grassroots “Buy Canada” movement that’s rapidly gaining steam, fueled in part by what Canadians perceive as U.S. heavy-handedness and economic intimidation tactics.
Still, there’s no ignoring that the biggest losers in a tariff war would be consumers and small businesses on both sides who rely on stable North American trade flows.
In 2024, the two nations saw a staggering $762 billion in trade — making Canada the U.S.’s top export destination and its third-largest import source.
Dismantling such a relationship isn’t a decision made lightly, but Trump appears focused on what he sees as unfair targeting of U.S. firms. “We have all the cards,” he assured, pointing to U.S. leverage in global trade policy.
Meanwhile, Trump’s broader tariff plans aren’t exclusive to Canada. He’s warned that similar letters are in the mail for India, the U.K., the EU, and of course, China. Clearly, the former president isn’t in a mood for open borders and open markets without reciprocity.
Some American business organizations support Trump’s hardline response, arguing the tax singles out U.S.-based firms for their size and dominance in the digital space.
Opponents argue that hiking tariffs will jack up prices for everyday Americans and disrupt the very supply chains that keep retail shelves stocked and families afloat.
But let’s be realistic: on issues like Big Tech taxation, it’s hard to pretend that a “global consensus” exists. If anything, countries like Canada are using the excuse of digital fairness to shift tax revenue uphill from Silicon Valley to Ottawa.
Trump has long viewed tariffs as both a punishment and a negotiation tool — a two-sided coin meant to discipline unfair practices and bring jobs back home.
That philosophy remains intact, and the termination of these trade talks reflects a return to that pragmatic, America-first mindset.
Markets don’t like unpredictability, but they hate feeling taken advantage of even more. Trump’s approach might be jarring, but it’s at least consistent with his belief that foreign allies should act like friends, not toll collectors.
With the sudden halt in negotiations, Canadian exporters now face looming cost increases that could price them out of the U.S. market. And who pays the tab for those tariffs? Often, American importers and end consumers — unless, of course, the threat itself brings Canada back to the table with meaningful concessions.