Trade discussions between Canada and the United States will end “until such time as they drop certain taxes,” U.S. President Donald Trump said in an interview broadcast, repeating his position after Prime Minister Mark Carney said the Canadian government would continue dialogue.
Trump’s comment was made during an interview on the Fox News “Sunday Morning Futures with Maria Bartiromo” program on June 29.
“Based on this egregious Tax, we are hereby terminating all discussions on trade with Canada, effective immediately,” Trump said. “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.”
Trump said Canada was “obviously copying” the European Union, which imposes the same tax, and added that Canada has been a “very difficult country” to trade with.
Carney’s office, in a June 27 statement to media, said in response that the Canadian government will continue to “engage in these complex negotiations with the United States in the best interests of Canadian workers and businesses.”
“They were foolish to do it, so I said, ‘we’re gonna stop all negotiations with Canada right now until they straighten out their act,” Trump said.
Digital Services Tax
The DST, a 3 percent levy on revenue from digital services provided to Canadian users, mainly applies to businesses such as Amazon, Netflix, Google, and Airbnb. The tax takes effect on June 30 and is retroactive to 2022 for U.S. companies.The Liberal government initially proposed the DST in 2021 and framed the tax as an interim measure to apply until an acceptable multilateral agreement comes into effect to address the issue through international negotiations among the members of the Organisation for Economic Co-operation and Development.
Ottawa agreed to pause the tax’s implementation until the end of 2023 and only impose it if no multilateral agreement had come into force by then. However, a multilateral solution was not reached and the federal government went ahead with the tax.
The U.S. House Ways and Means Committee said in 2023 that Canada “could face significant consequences” if it proceeded with the “discriminatory” tax. The committee also questioned whether the tax would violate Canada’s obligations under the United States-Mexico-Canada Agreement.
However, Canadian Finance Minister François-Philippe Champagne told reporters on June 19 that the DST could be part of “broader discussions” with the United States but that the government would move ahead with the tax in the meantime.
Champagne also said Canada had explained to the United States that the tax is “neutral,” which he said was mentioned at the G7 meeting a few weeks ago.
