Trump Slams Canada Over Digital Tax, Forces Sudden Policy Reversal

Just as U.S.-Canada relations appeared stable, a fresh dispute ignited over a 3% digital services tax targeting major U.S. tech giants like Amazon, Meta, and Google. The Canadian tax, retroactive to 2022, would cost American companies up to $2 billion, applying to firms earning over $14.6 million annually from Canadian users.

On June 27, former President Donald Trump blasted the move on Truth Social, calling it a “blatant attack” and halting all trade talks with Canada. He threatened tariffs within a week, accusing Canada of mimicking the EU and promising serious consequences if the tax remained.

Canadian Prime Minister Mark Carney initially responded diplomatically, but Trump escalated tensions, demanding the tax be removed entirely.

“This will not end well for them,” Trump warned.

Facing rising pressure from U.S. lawmakers, the two leaders held a high-stakes call Sunday. That evening, Canada backed down, announcing the suspension of the tax in anticipation of a new trade deal.

Trade negotiations are now set to resume before the July 21 G7 summit.