Donald Trump says terminating trade talks with Canada over digital services tax, warns of new tariff

Donald Trump said that Canada is “copying the European Union, which has done the same thing, and is currently under discussion with us, also”.

Updated on: Jun 28, 2025, 04:23:15 IST

By HT News Desk

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United States President Donald Trump announced that he is terminating all trade discussions with Canada over the latter’s Digital Services Tax on American tech companies, calling it “direct and blatant attack” on the US.

Canada’s Digital Services Tax, which Trump called “direct and blatant attack” on the US, is set to take effect from Monday. (File/AP)

Calling Canada, US’ neighbour, a “very difficult country to deal with”, Trump added that he plans to retaliate with another tariff on Canada which will be announced within the next seven days.

In a post on TruthSocial on Friday, Trump wrote, “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.”

“They are obviously copying the European Union, which has done the same thing, and is currently under discussion with us, also. Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately,” he added.

"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!”

Canada’s Digital Services Tax is set to take effect from Monday.

What is Canada’s Digital Services Tax?

Canada’s Digital Services Tax (DST) is a 3% tax on revenue from specific digital services provided to Canadian users, enacted through the Digital Services Tax Act, which received royal assent on June 20, 2024, and took effect on June 28, 2024.

The digital services tax applies at a rate of 3% on revenue earned from “certain digital services that rely on engagement, data, and content contributions of Canadian users” and “certain sales or licensing of Canadian user data”, according to the government of Canada.

The tax will hit US tech giants such as Amazon, Google, Meta, Uber, and Airbnb and will levy a 3% tax on the money they make from Canadian users. The tax will be applied retroactively on revenues earned since January 1, 2022, meaning that the US companies will owe about $2 billion by the end of this month, reported AP.

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HT News Desk
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