Tensions have flared between the U.S. and Canada after President Donald Trump accused Canada of launching a “blatant attack” on American businesses.
The dispute centers around Canada’s newly announced 3% digital services tax, retroactive to 2022, targeting major U.S. tech firms like Amazon, Meta, Google, Uber, and Airbnb.
The tax would apply to companies earning over $14.6 million annually from Canadian users, amounting to a potential $2 billion bill due by the end of the month.
Trump responded sharply on Truth Social, calling Canada a difficult trade partner and accusing it of mimicking the EU’s digital tax approach. He declared an immediate halt to trade discussions with Canada and promised to announce retaliatory tariffs within seven days. The move marked a major shift in U.S.-Canada relations, with last year’s trade volume exceeding $762 billion. Canadian Prime Minister Mark Carney, known for his calm demeanor, responded by saying negotiations would continue in Canada’s best interest.
Trump later reinforced his stance in White House comments, warning Canada that they were making a serious mistake and suggesting the tax would eventually be reversed. Pressure had also mounted from U.S. lawmakers, who labeled the tax “unprecedented and discriminatory,” urging Trump to act. Trump also criticized Europe for similar tax efforts, accusing them of exploiting past U.S. administrations while insisting he holds the upper hand. The situation escalated until a Sunday night phone call between Trump and Carney. Shortly after, Ottawa announced it was pausing the digital services tax in anticipation of renewed trade talks with the U.S., just hours before the tax was set to take effect. Carney said the move aligns with ongoing negotiations and a July 21, 2025, target agreed to at the recent G7 summit.
