President Trump declared an immediate end to all trade talks with Canada, citing Ottawa’s imposition of a 3% digital services tax on American tech giants like Google, Meta, Amazon, and Apple as “a direct and blatant attack on our country.” He made the announcement via Truth Social on June 27, 2025
Why This Matters
Trump views Canada’s digital tax, which is retroactive to revenue from 2022, as “egregious” and damaging to U.S. tech firms. He has promised to impose new tariffs within the next week, citing leverage over trade negotiations
Canada’s Response
Prime Minister Mark Carney rejected any notion of capitulating, saying “Canada is not for sale” and committing to continued negotiations “in the best interests of Canadians” despite the sudden collapse of talks
Economic Implications
- Canada is the U.S.’s second-largest trade partner; roughly 75% of Canadian exports go to the U.S., accounting for about 20% of Canada’s GDP .
- Stock markets reacted nervously but rebounded by the end of the session, with the S&P 500 closing at record highs despite fears of a fresh trade conflict nypost
What’s Next
The U.S. Trade Representative may launch a Section 301 investigation into the digital tax’s effects on American firms, paving the way for retaliatory tariffs. Canada, meanwhile, shows no intent of retracting the tax, framing it within its sovereign fiscal policy.
Final Take
Trump’s abrupt decision to end trade talks exposes deep tensions over digital tax regimes and could mark the start of a wider trade dispute. With Canada remaining firm and the U.S. promising tariffs, both economies may strain under renewed friction—and investors are watching closely.
