The already tense trade relationship between Canada and the United States just got even rockier.
On Friday, U.S. President Donald Trump announced via Truth Social that he’s “terminating all discussions on trade with Canada, effective immediately,” citing the country’s newly enacted Digital Services Tax as the reason for the sudden move.
In his post, Trump called Canada “a very difficult Country to trade with,” claiming it has “charged our farmers as much as 400% tariffs, for years, on dairy products.” He accused the federal government of targeting American tech companies with what he called “a direct and blatant attack on our country.”
Canada’s Digital Services Tax, which came into force in 2024 and applies retroactively to January 2022, imposes a 3% levy on digital revenues made in Canada by large multinational tech firms — including Meta, Amazon, Google, and others. It affects companies earning at least €750 million globally and $20 million or more from Canadian users.
“They are obviously copying the European Union,” Trump wrote, “which has done the same thing, and is currently under discussion with us, also.”
As a result, the 79-year-old promised new tariffs on America’s northern neighbours.
“Based on this egregious tax,” he continued, “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 White House has yet to release further details on which Canadian goods could be targeted, but Trump’s threat comes amid growing cross-border tensions. Back in May, Prime Minister Mark Carney publicly rejected Trump’s suggestion that Canada could become the U.S.’s 51st state, saying, “It’s not for sale and won’t ever be for sale.”
Meanwhile, Canadian travel to the U.S. has already been dipping. In April 2025, Montreal-Trudeau Airport reported a 10.1% drop in U.S.-bound passenger traffic compared to the year prior — even as domestic and international travel grew.
Canada has not yet issued an official response to Trump’s statement.
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