Trump claimed the Canadian DST mirrors similar moves by the European Union, with which the U.S. has also had contentious negotiations regarding digital taxation
Former U.S. President Donald Trump has announced the immediate termination of all trade discussions with Canada, calling the country’s recently implemented Digital Services Tax (DST) a “blatant attack” on American businesses.
In a fiery post on his social media platform Truth Social on Friday (U.S. local time), Trump lashed out at Canada’s trade practices and accused the country of unfairly targeting U.S. tech giants.
“We have just been informed that Canada, a very difficult country to TRADE with—including the fact that they have charged our Farmers as much as 400 percent Tariffs, for years, on Dairy Products—has just announced that they are putting a Digital Services Tax on our American Technology Companies,” Trump wrote. “This is a direct and blatant attack on our Country.”
He added: “Based on this egregious tax, we are hereby terminating ALL discussions on trade with Canada, effective immediately. We will let Canada know the tariff they will be paying to do business with the United States within the next seven-day period.”
Trump claimed the Canadian DST mirrors similar moves by the European Union, with which the U.S. has also had contentious negotiations regarding digital taxation. The Canadian government’s new DST, introduced by the Canada Revenue Agency, imposes a 3 percent tax on certain revenues earned by large companies from online user engagement in Canada. The tax applies to both foreign and domestic firms that meet specific revenue thresholds.
Though passed last year, the tax officially takes effect Monday and is retroactive to 2022. According to The New York Times, U.S. tech companies are expected to pay roughly USD 2.7 billion in retroactive dues to Canada.
CNN reported that the DST targets large multinational tech firms—many of which are based in the U.S.—such as Google, Apple, Amazon, Meta, and Microsoft. The U.S. government has repeatedly raised concerns about DSTs during global trade talks, describing them as non-tariff trade barriers that unfairly impact American businesses.
The DST’s retroactive nature has been particularly controversial among U.S. lawmakers and trade experts. Critics argue it violates global norms and disproportionately penalizes American companies that dominate the digital economy.
Trump’s decision marks a dramatic escalation in trade tensions between the neighboring countries and raises uncertainty about the future of U.S.-Canada economic relations.
While the White House has not yet responded to Trump’s declaration, Canadian officials have maintained that the DST is a fair and necessary measure to ensure that large digital firms contribute their fair share to the Canadian economy.
According to Canadian officials, the tax was designed in response to slow progress on a global agreement under the Organisation for Economic Co-operation and Development (OECD) that aims to modernize international tax rules for the digital age.
The U.S. had previously pushed Canada to delay the implementation of the DST to allow more time for OECD-led negotiations. However, with no final agreement reached, Canada proceeded with its own digital tax framework.
Trump’s announcement to end trade talks and threaten retaliatory tariffs revives memories of his administration’s 2018 tariff wars, which strained ties with traditional allies, including Canada. At the time, he imposed tariffs on Canadian steel and aluminum, prompting retaliatory measures from Ottawa.
Industry groups representing American tech firms have voiced concern about DSTs, arguing that multiple countries adopting unilateral digital taxes leads to an unpredictable and burdensome environment for businesses.
With the first DST payments due Monday, it remains unclear how U.S. firms will proceed amid the political fallout. Analysts warn that retaliatory tariffs could deepen trade tensions and impact sectors far beyond technology.
Meanwhile, observers are watching closely to see whether President Joe Biden’s administration will maintain a different stance or support negotiations to resolve the DST dispute diplomatically.
