Trump abruptly ends trade talks with Canada over tax on U.S. tech

President Donald Trump said on Friday that he was abruptly ending all trade discussions with Canada over a pending 3% digital services tax on U.S. tech companies. He also threatened to impose another round of tariffs within a week, injecting fresh turmoil into U.S. relations with one of its biggest trading partners.

"Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately," Trump wrote in a social media post. "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."

Trump called the tax "a direct and blatant attack" on the United States in the same social media post. The Trump administration has campaigned against digital service taxes, assailing them as a form of plunder against U.S. firms.

"Economically, we have such power over Canada. I'd rather not use it, but they did something with our tech companies," Trump said later on Friday afternoon. "It's not going to work out well for Europe, either, and it's not going to work out well for Canada."

The Canadian Embassy in Washington D.C. did not immediately respond to a request for comment.

Treasury Secretary Scott Bessent said he expects the U.S. Trade Representative Jamieson Greer to kickstart a new Section 301 investigation into Canada's digital service tax. That step could set in motion another barrage of tariffs under a fortified legal basis if it's deemed an "unjustifiable" act that threatens U.S. commerce.

"We knew it was coming, we hoped they wouldn't do it," Bessent told CNBC.

The Trump administration remains locked in a trade war against Canada with steep tariffs on Canadian aluminum and steel. But both governments were hoping to resolve those differences and lock in a sweeping deal by the end of July.

Canada and other nations in the European Union pioneered a digital service tax that would apply taxes on the international profits of Big Tech companies such as Meta and Airbnb.

The first payment from U.S. tech firms to the Canadian government is due in three days. That has generated opposition from some Canadian business groups that warned it would invite retaliation from the U.S.

Trump has appeared to grown fond of keeping the world guessing on his next trade move. On Friday, he suggested that his July 9 deadline to reimpose harsh tariffs on trading partners across the globe could be extended — or maybe not.

“We could extend it. We could make it shorter,” Trump told reporters on Friday. “I’d like to make it shorter. I’d like to just send letters out to everybody, ‘Congratulations, you’re paying 25 percent.’”