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Canada and the US: Trump Terminates Trade Talks Over Digital Tax

By June 27, 2025June 30th, 2025No Comments

Description: US President Donald Trump announced that his trade negotiations team would effective immediately terminate all forms of trade talks with Canada, after the latter announced the imposition of 3% Digital Services Tax Act (DSTA). The DSTA stipulated that tech companies such as Google, Meta, Apple and Amazon would be forced to pay 3% tax on digital services originating from the Canadian market which after projections amounted to over $2 billion bill due at the end of the month. Trade has been only one of the more sensitive subjects between the neighbors as Trump repeatedly threatened to annex Canada as the 51 US State and positioned the country as a collaborator in the fentanyl pandemic plaguing the US.

Impact: The termination of trade talks with Canada on the eve of Trump’s deadline could be perceived as an aggressive negotiating strategy, forcing Canada towards trade concessions reportedly crucial to the US domestic economy. Trump managed to drag China into trade negotiations in the same way by escalating the imposition of tariffs which at the end neared 145% and suddenly deescalated by engaging China in trade negotiations. Canada might oppose the US on the DSTA in the short – term, however, the multilayered bilateral issues such as the incorporation of the Golden Dome, tackling the fentanyl pandemic and future strategic ties, would prompt Canada into agreeing towards the concessions imposed by the US.

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