Trump cuts trade talks with Canada over tech firms tax

Donald Trump has said he is suspending all trade talks with Canada – and making plans to force Americans to pay high import taxes on its goods – after the northern ally’s finance department confirmed plans to collect a digital services tax.

- ANDREW FEINBERG

The move on Friday afternoon quickly caused markets to spiral amid fears of a return to the US president’s self-inflicted trade war.

In a post on Truth Social, Mr Trump complained that he had “just been informed” about the Canadian government’s tax decision, which will see it require payment of a 3 per cent tax on revenue collected from Canadian users of digital platforms such as Facebook, Instagram and X (Twitter), above $14.6m (£10.6m) in a calendar year retroactive to 2022.

The tax could saddle American technology companies with bills as large as $2bn for the first retroactive payments.

Although it is meant to apply to any company that provides digital services and takes in profits from selling advertising or user data, Mr Trump complained that it amounted to Ottawa “putting a digital services tax on our American technology companies”, and called the move 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,” the president wrote. He added that the result of the “egregious tax” would be the US “hereby terminating ALL discussions concluded with Canada, effective immediately”.