Tensions have reignited between the U.S. and Canada after President Donald Trump accused his northern neighbors of a "blatant attack".
Canadian Prime Minister Mark Carney, 60, who pulled off an unlikely election win in April, had kept relations relatively calm with the 79-year-old Republican president, who respects Carney’s background as a former banker.
But a new tax has thrown that fragile calm into chaos.
The controversy centers on Canada’s decision to introduce a 3% digital services tax on companies including Amazon, Google, Meta, Uber, and Airbnb, retroactive to 2022, leaving U.S. tech giants facing a $2 billion bill due at the end of the month, as reported by NBC News.
The tax applies to revenue collected from Canadian users if it exceeds $14.6 million in a calendar year.
Reacting on Truth Social on June 27, Trump fumed: “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.”
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!”
Shortly after, Carney was asked about Trump’s post, delivering a blunt response: “We’ll continue to conduct these complex negotiations in the best interests of Canadians.”
And Trump wasn’t done there. Speaking to reporters later in the Oval Office, the president warned: “Economically we have such power over Canada. We’d rather not use it. It’s not going to work out well for Canada. They were foolish to do it,” per the Independent.
Asked whether Canada could do anything to resume negotiations, Trump said the country could remove the tax, predicting it will, but added: “It doesn’t matter to me.”
The outburst comes just weeks after a group of House members urged Trump to respond swiftly to what they called an “unprecedented, retroactive tax” by Canada, warning it would “set a terrible precedent that will have long-lasting impacts on global tax and trade practices.”
“Allowing Canada to proceed with this unprecedented, retroactive tax on U.S. firms would send a signal to the rest of the world that they have the green light to proceed with similar discriminatory cash grabs targeting our firms, workers, and tax base,” they argued.
While the U.S. Trade Representative’s office noted that trade between the U.S. and Canada totaled roughly $762 billion last year, Canada remains one of America’s top trading partners, making Trump’s suspension of talks a major shake-up, per the Guardian.
In the same Oval Office appearance, Trump took aim at Europe over similar digital tax plans, claiming: “They have been unbelievably bad to us. If you look at past presidents, they've treated them very badly.
"They're being very nice to me, because I get it. I know the system, and we have the cards. We have the cards far more than they do, and they have not treated us well, and they're coming to us right now.”
He also added: “They’re nasty people, and I don't want them affecting U.S. companies. I don't want that — if anybody's going to affect a U.S. company, I want it to be us, and if they're going to have to pay a penalty or fine, let it be to us.”