Canada gets the boot as Trump terminates trade discussions amid its ‘Digital Services Tax’
President Trump kicked Canada to the curb on trade discussions amid the country’s ‘Digital Services’ tax on American tech companies
by Summer Lane | June 27, 2025
President Donald Trump announced on Friday that he was terminating trade discussions with Canada in response to the country’s “Digital Sales Tax,” giving them a one-week wait to inform them what their tariff will be for the privilege of doing business with the United States.
Trump explained on Truth Social that Canada has been charging American farmers “as much as 400% tariffs, for years, on Dairy Products” and slammed them for slapping a tax on digital services from the U.S.
“We have just been informed that Canada, a very difficult Country to TRADE with, including the fact that they have charged our Farmers as much as 400% Tariffs, for years, on Dairy Products, has just announced that they are putting a Digital Services Tax on our American Technology Companies, which is a direct and blatant attack on our Country,” he wrote.
Trump said Canada was “copying” the European Union’s trade model, calling the tax “egregious.”
“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. Thank you for your attention to this matter!” he concluded.
While it may appear that this digital services tax is a brand-new development, it has been in effect since 2024. According to Fox Business, the tax kicked in last June, requiring large tech businesses – regardless of where they are headquartered – to pay a 3 percent tax on revenue made from engaging with Canadian users.
Trade deals not made by late July are subject to President Trump setting trade deals or tariff rates for them, which appears to be what has happened to Canada.
Earlier this week, White House Press Secretary Karoline Leavitt noted the “deadline is not critical,” but the president would “provide” a deal for them if they don’t propose their own, or if such deals are unsatisfactory.
“The president can pick a reciprocal tariff rate that he believes is advantageous for the United States and for the American worker, and he will continue to do that,” she said.
