In a sharp escalation of trade tensions between two of North America’s closest allies, US President Donald Trump announced on June 27 that the United States is terminating all ongoing trade negotiations with Canada. The decision follows Canada’s implementation of a digital services tax that Trump labeled a “direct and blatant attack on our country,” targeting American technology giants like Amazon, Google, and Apple.

This dramatic move marks a new low in the bilateral relationship, with Trump accusing Canada of economic hostility and pledging retaliatory tariffs within a week. The Canadian government, while expressing disappointment, has vowed to stand firm and continue negotiations “in the best interests of Canadians.”

Tensions between the US and Canada have simmered since Trump returned to office and quickly reinstated his signature trade policies. In February, just weeks after his inauguration, the Trump administration imposed 25% tariffs on a range of Canadian exports, including aluminum, lumber, and agricultural products. Ottawa responded with its own countermeasures, hitting American dairy, whiskey, and manufactured goods.

Though Trump briefly suspended the tariffs in early May, signaling openness to “deal-by-deal” arrangements, hopes for long-term stability were dashed when Canada enacted its long-planned digital services tax (DST) in June. The measure imposes a 3% tax on revenue earned by large tech companies-those with over CAD 20 million ($14.5 million) in Canadian-source revenue-from digital services offered in Canada. Notably, the tax applies retroactively to January 1, 2022, adding to its controversial nature.

American companies such as Google, Meta, Amazon, Apple, Uber, and Airbnb are expected to owe a collective $2 billion CAD by the end of July,........

© Blitz