Trump dubs ‘egregious tax’ on tech firms direct, blatant attack; Carney says will continue negotiation

US President Donald Trump said on Friday he’s suspending trade talks with Canada over its plans to continue with its tax on technology firms, which he called “a direct and blatant attack on our country”.

In a post on his social media network, Trump said Canada had just informed the US that it was sticking to its plan to impose the digital services tax, which applies to Canadian and foreign businesses that engage with online users in Canada. The tax is set to go into effect on Monday.

“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,” he said.

Trump described Canada as a “very difficult country to trade with” and told reporters at the White House that talks would not resume “until they straighten out their act”, adding: “We hold such power over Canada.”

Canadian Prime Minister Mark Carney said his country would “continue to conduct these complex negotiations in the best interests of Canadians. It’s a negotiation.”

Trump’s announcement was the latest swerve in the trade war he’s launched since taking office for a second term in January. 

The digital services tax will hit companies including Amazon, Google, Meta, Uber and Airbnb with a 3% levy on revenue from Canadian users. It will apply retroactively, leaving US companies with a $2 billion US bill due at the end of the month. 

“We knew (the tax) was coming. We hoped they wouldn’t do it,” US Treasury Secretary Scott Bessent said.

“We think it’s patently unfair to do it retroactive. This is something from the Trudeau years, so we were hoping, as a sign of goodwill, that the new Carney administration would at least put a break on that during the trade talks. They seem not to have,” Bessent told CNBC. If the Canadian government moves forward with the tax, Bessent said Trump is prepared to impose higher tariffs across all Canadian goods, without specifying a rate.