Trump cancels trade talks with Canada over digital tax

President Trump says he is cutting off trade talks with Canada because of a digital services tax on U.S. technology companies.

Mr. Trump’s decision, outlined Friday on Truth Social, is an abrupt turnabout in relations with the United States’ northern neighbor and close trading partner. It’s also a sharp warning for other countries before Mr. Trump’s July 8 deadline to strike trade deals or face high U.S. tariffs.

“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,” Mr. Trump wrote.

Mr. Trump signaled that there was little Canada could do about his decision, except cancel the tax. He said the U.S. market has the upper hand in trade.

“We have all the cards,” he said later in the Oval Office.

Canada appeared to be copying the European Union, which angered the administration by imposing a tax that will hit companies such as Google, Meta and Amazon.

Canada enacted the tax last year, and it is retroactive to 2022. The first taxes will be collected Monday.

The tax charges 3% of the digital services revenue, above $14.6 million, that a company brings in from Canadian users in a given year.

“Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately,” Mr. Trump wrote.

Canadian Prime Minister Mark Carney responded Saturday by saying trade negotiations with the United States were “complex.”

“We’ll continue to conduct these complex negotiations in the best interest of Canadians,” Mr. Carney told reporters in Ottawa. “It’s a negotiation.”

Mr. Trump and Mr. Carney have been relatively cordial lately. They exchanged handshakes at the White House and the Group of Seven summit in Alberta.

Yet Mr. Trump has been willing to stir the pot with Canadian leaders since the start of this year. He said Canada is so reliant on the U.S. that it should become the 51st state.

He also imposed a 25% tariff on Canadian imports, though many goods are exempt under the U.S.-Mexico-Canada Agreement reached during Mr. Trump’s first term.

Canadian producers are grappling with a 50% tariff that Mr. Trump imposed on steel and aluminum products that enter the U.S. and a 25% tariff on cars and car parts.

Mr. Trump’s latest threat suggests Canadian goods will be subject to some form of blanket levy, with no room for negotiation.

The president said Friday that it would be impossible to negotiate with every trading partner.

“We’re going to send out a letter, and we’re just going to tell them what they have to pay to do business in the United States,” Mr. Trump said. He added that India and other countries might strike last-minute deals.

The Trump administration reached a deal in principle that opened British markets to U.S. farm goods and other products in exchange for some British tariff relief.

The U.S. and China also have a framework to encourage dialogue on deep trade issues. Both countries took steps last week to implement the deal, in which China will send rare earth minerals to the U.S. in exchange for relief on tech-export controls.

Other deals haven’t been forthcoming, raising questions about whether the administration would negotiate agreements, grant extensions or assign tariffs.

Speaking at a White House press conference, Mr. Trump said he is ready to name a tariff number for most nations.

“Some will be disappointed because they’re going to have to pay tariffs,” he said.

Tariffs are taxes or duties paid by importers on goods from foreign markets.

Mr. Trump says imposing tariffs can force companies to return to America or keep their operations in the U.S., employ American workers and create revenue to fund domestic programs. He said many companies are investing billions of dollars in the U.S. to avoid tariffs.

Foreign countries don’t pay the tariffs directly to the U.S. Treasury. In many cases, U.S. companies pay the levies, and they might pass along at least some of the cost to consumers through higher prices.

Some American companies have announced price increases because of tariffs, but doomsday scenarios haven’t come to pass. Depending on their ultimate levels, the tariffs may start to bite later this year.

Mr. Trump has repeatedly pointed to the billions of dollars in tariff revenue for the U.S. Treasury. He also wants to leverage tariffs to close trade deficits, or situations in which countries sell plenty of products to American consumers but don’t buy nearly as much from U.S. producers.

“Some countries … are used to ripping us off, to be honest with you,” Mr. Trump said.

The president has said the European Union is especially difficult to negotiate with despite the historical ties between the European bloc and the U.S. He is also willing to mix it up with Canada.

Canada and the U.S. conducted $762 billion worth of trade in 2024, according to the Office of the U.S. Trade Representative. Canada was the top destination for U.S. exports and the third-largest source of U.S. imports.

Canadians reacted angrily to Mr. Trump’s aggressive approach to trade and started a “Buy Canada” campaign to stir national pride. The uproar also fueled an unlikely election victory for Mr. Carney and his Liberal Party this year.

In the U.S., some organizations applauded Mr. Trump for his tough stance on the digital services tax.

“This tax unfairly singles out American firms while local competitors skate by,” said John Czwartacki, co-founder and principal of Public Policy Solutions, which advocates for American prosperity and free markets. “Whether it’s Brussels or Ottawa, President Trump is right to call them out and force this to change.”