President Donald Trump has announced that he is terminating all trade negotiations with Canada, calling Canada’s move to impose a digital services tax “a direct and blatant attack.” The decision is effective immediately.
“We will let Canada know the tariffs they have to pay to do business with the United States in the next 7 days,” Mr. Trump affirmed on June 27 (local time).
The Digital Services Tax Act was approved by Canada on June 20, 2024, and came into effect on June 28. Under the act, companies with digital service revenue from Canadian users exceeding $14.6 million/year will be subject to a 3% tax.
Businesses have called on Canada to suspend the tax, fearing it would increase the cost of providing services and avoid the risk of angering the US government . But so far, Canada has refused and will begin collecting the tax on June 30.
Canadian Finance Minister Francois-Philippe Champagne has said that a digital services tax could be negotiated as part of trade talks with the U.S. The two sides had been expected to reach a deal by July, but that prospect has become more tenuous following President Donald Trump’s latest move.
In a statement on the same day, the Office of Canadian Prime Minister Mark Carney said the government will continue to negotiate with the United States for the benefit of workers and businesses.
In a related development, Vina Nadjibulla, Vice President of Research and Strategy at the Asia- Pacific Foundation of Canada, commented that President Trump's announcement to cancel trade negotiations with Canada is an escalation.
In that context, Canada will need to find a way to work around it rather than give in. It can work with the European Union (EU) and other partners before formulating an appropriate response, especially since a digital services tax is also part of the negotiations between the US and the EU.
Experts say that the tariff policy targeting Canadian goods is detrimental to both Canada and the US because it will increase the cost burden for businesses, directly affecting consumers.
Canada is the second largest trading partner of the United States, after Mexico. In 2024, the country bought $349.4 billion worth of goods from the United States and exported $412.7 billion to the American market. The US tariff policy has affected Canada's exports of steel, aluminum, and automobiles. The country's economy has also begun to decline with unemployment at 7%.
(According to Aljazeera, Xinhua)
Source: https://hanoimoi.vn/my-huy-dam-phan-thuong-mai-voi-canada-707092.html
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