President Donald Trump has stopped trade talks with Canada. He shared this news on social media. The reason is Canada’s new digital services tax. This tax hits American tech companies hard.
Trump also warned of new tariffs on Canadian goods. He said these could start within a week. This move has stirred up reactions from both sides of the border.
Background on the Trade Dispute
The US and Canada have had trade issues before. Tariffs have gone back and forth over the years. Now, the digital services tax is the big problem. Canada charges a 3% tax on digital revenue, like online ads and data sales. It targets companies earning over $750 million globally and $20 million in Canada.
Big US tech firms like Google, Facebook, and Amazon feel the pinch. Canada says this tax makes things fair. It wants companies operating there to pay up. But the US calls it unfair to American businesses. Trump labeled it a “blatant attack” on the US. He also pointed to Canada’s high dairy tariffs as another sore spot.
This tax could raise costs for US tech companies. They might charge consumers more or cut back in Canada. New tariffs from Trump could hit goods like steel, lumber, or cars. Both countries could see higher prices if tensions grow.
Canada’s Reaction
Canadian Prime Minister Mark Carney responded quickly. He said Canada will keep negotiating. Carney told reporters, “We’ll work in the best interest of Canadians.” His team was caught off guard. They got no warning from Trump’s side.
This shows a communication gap between the leaders. Carney brings a calm style to the table. He used to lead the Bank of England and handled Brexit challenges. His plan seems to focus on finding a middle ground.
How Markets Responded
Trump’s news shook the stock market at first. The S&P 500 and Nasdaq dropped briefly. But they bounced back fast. Both hit record highs by the end of the day.
Candace Laing from the Canadian Chamber of Commerce spoke to NBC News. She said surprises could come as the deadline nears. Experts see hope in the recovery. The US and Canada rely on each other economically. Tariffs could still hurt industries like car manufacturing, where parts cross the border often.
Past Trade Moves
Trump likes using social media for big announcements. Back in 2019, he threatened tariffs on EU goods. That ended with a deal, not a fight. This history hints he might be pushing Canada to bargain harder.
Carney, who became prime minister in 2025, has a finance background. He’s known for staying steady under pressure. His time at the Bank of England shaped his skills. Together, their styles could shape what happens next.
Voices from Leaders and Businesses
People are speaking out. Some US lawmakers back Trump. They say the tax hurts American companies. Others warn of economic risks. In Canada, opposition parties want a tough stance. The US Chamber of Commerce shared worries with Politico.
They fear trade ties could weaken. Canadian business groups push for a quick fix. The BBC reported on these mixed views. Both sides see stakes are high.
