Washington DC [US], June 28 : US President Donald Trump announced on Friday (US local time) that the United States will be terminating all discussions on trade with Canada, effective immediately.
In a post on Truth Social, Trump called Canada a "very difficult" country to trade with. He pointed out that the Digital Services Tax announced by the Canadian government is a blatant attack on America and its businesses.
"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 per cent 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," US President said.
The Government of Canada has introduced the digital services tax (DST). The DST requires foreign and domestic large businesses to pay tax on certain revenue earned from engaging with online users in Canada if they meet certain conditions, as per a statement issued by the Canadian Revenue Agency.
Trump further said that Canada will be informed about the tariffs they will have to pay to do business with the US within the next seven days.
"Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately. 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 wrote.
According to CNN, DST allows countries to collect revenue from large companies that operate online, even if their business is unprofitable.
Citing a report published by the nonpartisan Congressional Research Service, CNN noted that American firms, particularly big tech companies like Meta, Apple, Google, Amazon and Microsoft, are disproportionately affected by DSTs.
CNN reported that the US President had taken up the issue of DSTs in the trade negotiations with other countries and had referred to them as "non-tariff trade barriers." It further reported that Canada has a new DST, which is set to come into effect from Monday and would be retroactive to 2022.
As per the New York Times, Canada's 3 per cent digital services tax has been in place since last year, but the first payments are only due beginning on Monday. Since the tax is retroactive in nature, American companies were preparing to turn over roughly USD 2.7 billion to the Canadian government, the NYT noted, citing a trade group for large tech companies.