United States President Donald Trump said he is ending all commercial discussions with Canada after claiming that the country has advanced to implement a digital service tax, and threatened to impose a new fare within the next week.
“Based on this outrageous tax, we are ending all discussions about trade with Canada, with immediate effect. We will inform Canada the fare they will have to pay to do business with the United States of America within the next seven days,” Trump published on Friday on a social network.
Canada’s main stock rate and currency fell after Trump’s comments.
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Canadian Prime Minister Mark Carney’s office and the country’s ministry of finances did not immediately respond to requests for comment.
Dozens of countries face a deadline until July 9 for Trump’s highest tariffs to be effective, and have negotiated with the US. This group does not include Canada and Mexico. The president imposed rates on US US neighbors earlier this year due to fentanyl trafficking and migration, and negotiations with them are being conducted separately.
US Treasury Secretary Scott Bessent said on Thursday that nations of the seven group would pause their taxes on US technology companies, in exchange for Republicans in the congress overthrow a proposal for retaliation tax on foreign investors. But it is unclear whether US allies have agreed with this arrangement. Canada is a member of the G-7.
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In any case, Canada is about to go with the tax, with the first payments scheduled for Monday. Business groups in the country oppose the collection, arguing that it would increase the cost of services and cause retaliation of the US.
A group of 21 American parliamentarians wrote to Trump earlier this month asking him to press for tax removal, estimating that he will cost $ 2 billion to US companies. In his trade policy, Trump has long criticized taxes and other non-tariff barriers, classifying them as obstacles to US exporters.
The Canadian tax on digital services, similar to that implemented by other countries such as the United Kingdom, is equivalent to 3% of the revenue of digital services that a company gets from Canadian users over C $ 20 million ($ 14.6 million) per year. He would apply to social media companies like the goal.
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However, Canada Finance Minister Francois-Philippe Champagne suggested last week reporters that digital tax can be renegotiated as part of commercial discussions between US and Canada. “Obviously, all this is something that we are considering as part of broader discussions that can occur,” he said.
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