Trump Halts Canada Trade Talks Over Digital Tax
Trump Ends Trade Talks with Canada Over Digital Tax
U.S. and Canada’s relationship has gone bad again after being calm for a while. Earlier this month, Trump and Canadian Prime Minister Mark Carney had a friendly meeting and agreed to make a new trade deal in 30 days.
But now, Trump is angry because Canada is starting a 3% digital tax on big U.S. tech companies like Amazon, Meta (Facebook), Google, and Apple. This tax applies to any company that makes over $20 million a year from Canadian users. It will even be collected for past years, going back to 2022.
Trump said on his social media platform, Truth Social, that this tax is “a direct and obvious attack” on the U.S. He called Canada “a very difficult country to trade with” and stopped all trade talks with Canada immediately. He also said Canada will soon find out what tariffs (extra taxes) they must pay to do business with the U.S.
Speaking to reporters, Trump said talks with Canada will not start again “until they fix their behavior” and said the U.S. has “a lot of power over Canada.”
Canada is very important for U.S. trade — it’s the second biggest trading partner after Mexico and buys a lot of U.S. goods. In 2023, Canada bought $349 billion worth of U.S. goods and sold $412 billion to the U.S.
Canada replied that it will continue to work in the best interest of Canadian workers and businesses.
U.S. Response and Global Trade Talks
U.S. Treasury Secretary Scott Bessent tried to calm the situation. He said the U.S. will likely launch an official investigation into Canada’s digital tax and might hit back with tariffs worth around $2 billion, which is how much the U.S. tech firms might lose.
The U.S. has already prepared similar actions against European countries that have added digital taxes.
Bessent said that the U.S. hopes to finish trade talks with 18 key countries by Labor Day (September 1). Talks are happening with countries like China, India, Japan, and the European Union.
Trump said he might change the July 9 deadline for making trade deals and joked that he’d send out letters to countries saying: “Congratulations. You’re paying 25%.”
Deal with China on Rare Earths
The U.S. and China also made progress on rare earth minerals and magnets — materials needed to make things like cars, smartphones, military equipment, and semiconductors.
Earlier, China had blocked exports of these items because of U.S. tariffs. But now, after talks in Geneva in May, both sides agreed to allow the materials to move again.
Bessent said he’s confident that China will now allow shipments to the U.S., and the U.S. will also start sending materials back to China.
China’s Commerce Ministry confirmed that both countries have agreed on how to move forward, but it didn’t specifically mention rare earths.
More Trade Talks with India and Japan
The U.S. also held trade talks with India and Japan. Japan said both sides are working to reach a deal that benefits both countries.
Mutib Khalid is a skilled content writer and digital marketer with a knack for crafting compelling narratives and optimizing digital strategies. Excel in creating engaging content that drives results and enhances online presence. Passionate about blending creativity with data-driven approaches, Mutib Khalid helps brands connect with their audience and achieve their goals.
