Trump Threatens Canada With New Tariffs Over Digital Tax Dispute

Fresh from the G7 and NATO summits, former President Trump made a surprising move: he announced the U.S. is ending all trade talks with Canada. This comes after Canada introduced a new 3% Digital Services Tax (DST) that targets American tech companies like Amazon, Google, and Airbnb.

Why the Tax Sparked Tension

The new tax, pushed by Prime Minister Justin Trudeau, goes into effect Monday. Canada expects to raise $7 billion with this tax. However, Trump sees it as an attack on American companies and workers. On his social media platform, Trump called the move unfair and said he will reveal new tariffs on Canada within a week.

More Than Just Tech

Trump also brought up other issues, like Canada’s high dairy tariffs—sometimes as high as 400%. He said these hurt American farmers and go against trade agreements like the USMCA. Industry groups in Canada are also worried. The Business Council of Canada warned the DST could damage the country’s relationship with its biggest trading partner: the U.S.

Canada’s Economic Struggles

Canada is already seeing signs of trouble. Its economy shrank by 0.1% in April, and early estimates show another 0.1% decline in May. Manufacturing is also slowing, and many fear a recession. Losing trade talks with the U.S. could make things worse.

A Deal in Doubt

Just days ago, Canadian officials were hopeful about a new trade deal with the U.S. by mid-July. But now, talks have stopped completely. Trump has given Canada seven days to scrap the new tax or face new tariffs.

What Comes Next

For years, America agreed to trade deals that favored allies in order to build global security during the Cold War. But many feel those days are over. Trump says it’s time for fair and equal trade, and he’s showing he’s willing to take a tough stance.

Whether Canada backs down or not, the next few days will be crucial for both countries.