Trump Says US Will Terminate Trade Talks With Canada Due To Ottawa's Digital Services Tax

U.S. President Donald Trump announced on June 27, 2025, via his Truth Social platform that the United States is immediately ending all trade negotiations with Canada. The decision comes in response to Canada’s new Digital Services Tax (DST) targeting American tech companies and longstanding high tariffs on U.S. dairy products. Trump’s statement signals escalating tensions between the two nations, raising concerns about the future of their economic relationship, which sees nearly $3.6 billion in goods and services cross the border daily.

A Look At Trump's Statement

“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% Tariffs, for years, on Dairy Products, has just announced that they are putting a Digital Services Tax on our American Technology Companies, which is a direct and blatant attack on our Country,” Trump wrote. 

“They are obviously copying the European Union, which has done the same thing, and is currently under discussion with us, also. Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately,” Trump went on, adding “We will let Canada know the Tariff that they will be paying to do business with the United States of America within the next seven day period. Thank you for your attention to this matter!”

Trump’s Grievances: Digital Tax and Dairy Tariffs

President Trump expressed frustration with Canada’s trade policies, specifically calling out their Digital Services Tax as “a direct and blatant attack on our Country.” The DST, which imposes a levy on revenue generated by large tech companies like Google, Amazon, and Meta from Canadian users, has been a point of contention. Trump accused Canada of mimicking the European Union, which has implemented similar taxes and is currently in trade discussions with the U.S.

Additionally, Trump highlighted Canada’s high tariffs on U.S. dairy products, claiming they reach “as much as 400%” and have hurt American farmers for years. While Canada does impose tariffs as high as 241–298% on certain dairy products under its supply management system, these apply only when U.S. exports exceed specific quotas set by the U.S.-Mexico-Canada Agreement (USMCA). Data from the U.S. Department of Agriculture shows that U.S. dairy exports to Canada, valued at $1.1 billion in 2024, rarely hit these quotas, meaning the high tariffs are seldom applied. Nevertheless, some U.S. dairy farmers argue that Canada’s restrictive quota allocations limit their market access.

Only time will tell if Canada will back down due to Trump's threat or go ahead with the Digital Services Tax.