President Donald Trump on Friday said that the U.S. will end its ongoing trade discussions with the Canadian government over its tax on digital service and that the country can expect new duties within a week.
“[W]e are hereby terminating ALL discussions on Trade with Canada, effective immediately,” Trump posted to Truth Social. “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.”
The president also once again lamented the high tariffs U.S. dairy exporters face selling into the Canadian market and slammed Canada as a “very difficult country to trade with.” He doubled down on the comments at an Oval Office event on Friday afternoon.
"It's not fair to our farmers, and we've got to protect our farmers," Trump told reporters.
The fracture stems from a new Canadian digital services tax set to go into effect on Monday. The Canadian government will begin taxing revenues on digital services made from Canadian users above a $20 million threshold at a rate of 3%. The tax is set to apply retroactively, going back to 2022.
Treasury Secretary Scott Bessent announced on Thursday that the U.S. had secured an agreement with Group of 7 countries to exclude U.S. companies from some global taxes. In exchange, the administration dropped a “revenge tax” provision from the “One Big Beautiful Bill Act” under consideration in the Senate. But the Canadian Finance Department confirmed on Friday that U.S. companies would still be subject to the incoming digital services tax.
“[T]hey are putting a Digital Services Tax on our American Technology Companies, which is a direct and blatant attack on our Country,” Trump railed in the Truth Social post. “They are obviously copying the European Union, which has done the same thing, and is currently under discussion with us, also.”
Multiple EU member states have implemented or proposed digital services taxes to tax revenues from large multinational technology companies. The EU has also previously proposed a bloc-wide digital sales tax.
At the Oval Office event on Friday, Trump suggested that Europe could also face a penalty over the taxes.
“It’s not going to work out well for Europe either," the president told reporters.
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Canada’s Finance Minister Francois-Philippe Champagne had told reporters last week that Canada’s digital services tax could be part of “broader discussions” with the U.S. The two sides had agreed at the G7 summit earlier this month to mount a 30-day sprint to secure a cross-border deal.
Canada is a major recipient of U.S. agricultural trade, accounting for around $28 billion of U.S. agricultural exports in 2024, and putting it behind just Mexico.
Trump has already imposed 25% duties on Canadian products not covered under the U.S.-Mexico-Canada Agreement, with a reduced 10% rate applied to energy products and potash.
Canada responded to those tariffs by slapping new duties on more than $21 billion worth of U.S. goods, including farm products like orange juice, peanut butter and wine. Tariffs on U.S. exports worth about $91 billion were postponed after Trump exempted USMCA-covered goods from U.S. duties.
The Canadian embassy did not respond immediately to Agri-Pulse’s request to comment on Trump’s announcement and the status of U.S.-Canadian trade discussions.
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