President Donald Trump has announced that the United States is terminating all trade talks with Canada, effective immediately.
The decision comes after Canada introduced a digital services tax on American tech firms.
In a post on Truth Social, Trump accused Canada of “copying the European Union” with the “egregious” tax, which he claims is a “direct and blatant attack on our Country.”
A Shocking Move
Trump’s surprise announcement has put the country’s trade relationship with one of its closest allies in jeopardy.
The United States and Canada have long been top global trading partners, with U.S. goods trade totaling roughly $762 billion last year.
The president’s decision has already had an impact on the markets, with the S&P 500 and the Nasdaq Composite both turning negative after the announcement.
Retaliation Plans
Trump has given Canada seven days to respond, after which the United States will impose a tariff on Canadian goods.
“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.
Treasury Secretary Scott Bessent has also announced plans to start an unfair trade practice investigation under Section 301 of the Trade Act of 1974 to determine the amount of harm posed by the new Canadian taxes to the U.S.
A Digital Services Tax
The digital services tax, which was enacted last year, applies retroactively to 2022 and targets both domestic and foreign tech companies, including giants like Amazon, Google, and Meta.
The first payments are set to be collected on Monday.
Canadian officials have refused to pause the tax despite opposition from the United States, sparking a trade war between the two countries.