Trump halts trade talks with 'difficult country' Canada, threatens new tariffs

US President Donald Trump on Friday announced that the United States is immediately ending all trade talks with Canada, citing the country's digital services tax as the reason for the abrupt decision.

In a post on Truth Social, Trump called the tax “a direct and blatant attack on our country” and described Canada as “a very difficult Country to TRADE with,” referencing long-standing disputes over tariffs on US dairy products. He accused Canada of copying the European Union, which has enacted similar digital levies.

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

The president added that his administration would notify Canada within the next seven days of the new tariffs it will face to continue doing business with the United States. "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," he said.

In response, Canadian Prime Minister Mark Carney said his government remains committed to the negotiation process. “We’ll continue to conduct these complex negotiations in the best interest of Canadians,” Carney told CBC.

The digital services tax, which took effect in June 2024, imposes a 3 per cent levy on revenues earned by large companies from digital services provided to Canadian users. The measure applies to online advertising, social media platforms, digital marketplaces, and sales involving user data. The first tax payments are scheduled to be collected on Monday.

Trump further criticized Canada's overall trade practices, calling it “a very difficult Country to TRADE with,” and claimed that Canadian tariffs on US dairy products can reach as high as 400 per cent.

The move to terminate trade talks comes amid ongoing tensions between the two countries, following a series of tariffs imposed by the Trump administration earlier this year.

Canada responded with retaliatory duties on American goods. Although both sides have expressed a desire to renegotiate their trade framework, progress has stalled.

The US-Mexico-Canada Agreement (USMCA), negotiated during Trump’s first term, is scheduled for review and possible renegotiation by 2026. However, Trump and Canadian Prime Minister Mark Carney had previously aimed to reach a revised agreement by July 21, 2025.