The monthslong negotiations with Canada end abruptly over digital services.
Trump Blames Canada’s ‘Egregious’ Digital-Services Tax
The Wall Street Journal reports Trump Says He Has Terminated Trade Talks With Canada
“Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately,” Trump wrote Friday on Truth Social.
Trump’s decision is the latest blow to an already strained relationship between the bordering nations. Trump has said the U.S. should annex Canada to improve trade relations and security. Recently elected Canadian Prime Minister Mark Carney has staked his political reputation on pushing back. He has said Canada isn’t for sale.
“These are very complex negotiations and we are going to continue them in the best interests of Canadians,” Carney said as he left his office in Ottawa on Friday.
The two countries had been negotiating a new trade deal for months. Trump and Carney clashed over dairy tariffs and the digital tax last week during a bilateral meeting at the Group of Seven summit in Canada.
Trump had grown furious that Canada refused to drop the digital-services tax, according to a senior U.S. official. He gave no warning to Canadian officials before publicly calling off talks in his post, this official said.
“Economically, we have such power over Canada, I’d rather not use it, but they did something with our tech companies…it’s not going to work out well for Canada,” Trump said later Friday in the Oval Office. “We have all the cards.”
Treasury Secretary Scott Bessent said on CNBC that the U.S. Trade Representative could soon start a Section 301 trade investigation to determine the harm being done to the American economy from Canada’s trade practices.
Canada’s finance minister, François-Philippe Champagne, earlier this month said the Canadian government had no intention of scrapping the tax, despite U.S. pressure to remove the levy.
The first payments from tech companies to the Canadian government over the digital-service tax, a levy on revenue companies make from Canadian users, are due on Monday. The tax would likely cost U.S. tech companies billions of dollars. It includes retroactive taxes on sales going back to 2022, and industry groups estimate the initial payment could total up to $3 billion, with subsequent annual payments north of $1 billion.
What Is Canada’s Digital Services Tax?
CBC News explains Canada’s Digital Services Tax.
Canada’s digital services tax (DST) affects mega companies that offer digital services — like online advertising or shopping — and earn more than $20 million in revenue from Canadian sources. Giant companies like Amazon, Apple, Airbnb, Google, Meta and Uber will be taxed three per cent on the money they make from Canadian users and customers.
The levy has been in place since last year, but the first payments are due starting Monday. It’s retroactive to 2022, so companies will end up with a $2-billion US bill due by the end of July.
Why is Canada creating the tax?
Revenue is one big benefit. The Parliamentary Budget Office estimated last year that the tax would bring in more than $7 billion over five years.
The Liberals first promised the tax during the federal election in 2019 under former prime minister Justin Trudeau, but it was delayed for years because a number of other nations wanted to work together on one, overarching digital taxation plan that could be applied in multiple countries.
As the delays dragged on, Canada went ahead with its own tax plan.
Aside from revenue, Ottawa has pitched the DST as a way to bring the tax code up to date and capture revenues earned in Canada by firms located abroad.
The Computer & Communications Industry Association has estimated U.S. companies could pay as much as $1 billion a year in tax if the measure remains on the books.
Why won’t Canada delay the tax until the trade war cools down?
Canadian and U.S. business groups, organizations representing U.S. tech giants and American lawmakers all signed letters in recent weeks calling for the tax to be eliminated or paused. But Finance Minister François-Philippe Champagne said the legislation was passed by Parliament, and Canada would be “going ahead” with the tax.
Pellerin, the international trade lawyer, said he suspects the federal government will avoid changing its plan because it’s taken a strategy of avoiding knee-jerk reactions to Trump’s negotiation tactics.
Do other countries have similar taxes?
Yes. France, Italy, Spain and the United Kingdom all have tax regimes in place, to name a few.
The easy solution is for countries to give up on digital services taxes when Trump ends reciprocal tariffs.
These digital service taxes are a very good way to get a better deal from Trump.
Canada also has leverage over US energy needs.
So let Trump throw a hissy fit. By the way, how many deals do we have? Trump said there were 200 guaranteed.
Trade wars are neither good nor easy to win. But they are fun for economic writers.
Related Posts
May 19, 2025: 90 Trade Deals in 90 Days, a Midpoint Update, Where Are We?
How is the administration’s call to do 90 deals in 90 days going?
Still only one deal.
On June 11, Bloomberg reported Trump Says Again He’ll Set Unilateral Tariffs in Two Weeks. But …
June 16 2025: TACO Trump Delays Again as Bessent Pushes Back a July 9 Announcement
Rocking in Terms of Deals!
Similarly, the Wall Street Journal reported, Trump Says U.S. Could Set Tariff Rates for Trading Partners Soon
“We’re rocking in terms of deals,” Trump said. But he added: “Now, at a certain point, we’re just going to send letters out. And I think you understand that, saying: ‘This is the deal. You can take it or you can leave it.‘”
Asked about the next potential trade deal, the president said the U.S. was dealing with about 15 countries, including Japan and South Korea. “But as you know, we have about 150-plus, and you can’t do that. So we’re going to be sending letters out in about a week and a half, two weeks, to countries telling them what the deal is like I did with EU,” he said.
Observation of the Day
It’s easy to make 300 deals in a day when you make deals with yourself.
Then again, one truly has to wonder.
I’m surprised to see so many people angry at Trump over this, especially considering the libertarian leaning nature of this blog. I guess TDS rage tantrums>sound economic choices.
You guys really need to up your dose of the TDS gummies. They’re not working anymore.
What happened is that Canada decided it doesn’t trust the TACO moniker, and whimpered “Please No”. I guess the thought of unemployment hitting 22% in Canada brought them into a more or less state of reality.
This latest trump~tariff~tantrum may have been brought on by QS’s breakthrough technological advance and the sudden threat it represents to the hydrocarbon industry that Trump is so subservient to.
On Tuesday, Quantum Scape (QS) announced that its newest iteration of Solid State battery manufacturing process has proven 25 times faster with a much smaller manufacturing footprint.
This is a game changer for the EV market and scalable electrical storage.
VW’s wholly owned subsidiary; PowerCo is building a $20 billion dollar (Canadian) cutting edge Solid State battery “Giga Factory” in Canada. Recently the QS, PowerCo, VW Group have expanded licensing from QS to produce batteries for 1 million vehicles.
Not the U.S.
Trump is going to economic war with our closest ally and neighbor Canada because he is freaking out about a 3% tax while imposing a 10+++% tariff/tax?
Talk about a mindless bully and destroyer of relationships.
Elections have consequences!
FWIW, Quantum Scape is a U.S. company based in San Jose, California. Patriot Metals is Canadian and sources its Lithium from Quebec. As a North American producer, this stabilizes our supply chain and reduces dependance on China.
Trumps radical approach to tariffs is harming American relationships, credibility and innovation as well as mining and manufacturing companies on behalf of big oil.
<
MAGA is too stupid to understand FAFO, 86/MAGA.
86/47
The US trade is now done don Corleone style: if you don’t have guns, you’re done.
It was probably the case before, but it was done in a more polite, institutionalized style like the now defunct WTO.
After all, you can only shake down allies and that only temporarily in a zero sum game. The rest of the world will adjust and move to the other side.
Sadly, you are correct. Many nations are rejecting U.S. products now that we have a bullying, inconsistent, narcissist as president.
Exports dropped 5.9% so that’s the tell on Trumps policies in action.
<
“Canada’s finance minister, François-Philippe Champagne, earlier this month said the Canadian government had no intention of scrapping the tax.”
Otherwise, we would have to introduce exit tax to shake down Canadian citizens fleeing the country, he added.
I’m not sure that they are leaving Canada. My experience with Canadian friends and business associates is that they are selling their U.S. bases assets (think vacation homes) and re-patriating their funds to Canida.
This is especially true in Florida where the governor sold out to the insurance industry and is allowing gouging via Real Estate Taxes, insurance companies and requiring massive increases in inspection and maintenance. Bravo DeSatins!
Trumps de-funding of FEMA is also likely to hit his voter base along with some exceptionally strong Hurricanes.
Rule of F’s. “If it Flys, Floats, Fucks or is in Florida? RENT IT”
Oops gotta go play on the farm…
I didn’t mean they are leaving for the US, but mostly re-migration to Europe.
Does this mean Trump will halt talks with Chicago over Digital Services taxes?
Canada lost Bombardier to Macron and gave it to China for free.
Canada lost its gems and its high tech industry. All she has is RE, banking and commodities Trump will collect higher tariffs and delay the plan to share high end industries with them. Carny ego trip is is idiotic. He turned his back to Daddy. He is worse than Pierre.
Dunning-Kruger effetc. 100% opposite opinion of Carney. Any student of his record will agree.
“He graduated with a bachelor’s degree in economics from Harvard University in 1987 before studying at the University of Oxford, where he earned a master’s degree in economics in 1993 and a doctorate in economics in 1995. He then held a number of roles at the investment bank Goldman Sachs, before joining the Bank of Canada as a deputy governor in 2003″
“Following his term as Governor of the Bank of Canada, he was appointed as the 120th governor of the Bank of England, serving from 2013 to 2020, where he led the British central bank’s response to Brexit and the early phase of the COVID pandemic.”
He was/is THE FIRST Foreign leader to lead the Bank of England (their Fed). Why? B/e he’s HIGHLY REGARDED and BRIGHT.
Canada has Canadian beer, Canadian Club, poutine (real poutine), and no-see-ums. Lots and lots and lots of no-see-ums.
And their biggest export – Canada geese.
Lots & lots. 🙂
The geese shit on soccer fields
Any field, parking lot or golf course will do. Of course the geese do not have passports and are illegals.
Lets deport them and their shit!
😉
Blue Moon !
That tax was long in the works.
In this regard, Trump is irrelevant to Canada.
He’s just a fly buzzing at the window.
I liken the digital services tax where revenue is collected from non-Canadian business as being similar to tariffs, the similarity being sooner or later the payment is collected from the folks using the products or fewer products will be offered. That being the case, Trump’s tariffs are much larger and more irrational than the Canadian tax and arguably much more unfair. I believe the hissy fit is unwarranted and unwise. Canada has many cards in this game, namely minerals, petroleum, forest products and electric energy to name a few.
A second point is what structurally is different from Trump’s deals and those of other presidents that never had senate concurrence? Trump is destroying American good will to get deals that may or may not be good for America only to go the way of the Paris Climate Accord, in the trash bin when he is out of office.
D
The pattern is clear now. any nation that executes their sovereign right to change policies regarding the U.S. will trigger a hissy fit from Trump and a reneging of any deal negotiated.
The playbook should then be to delay negotiations as long as possible for 1304 days because after that Trump will be history. Maybe sooner if dems win mid-terms and strip him of all power.
Given SCOTUS just gave Trump more carte blanche I doubt courts will take his tariff power away now but anything can happen.
Great time to have PUTS and an exit strategy in place.
In 2015 Obama signed a deal with Iran which expired already. Ten years is a blip in history. By now Iran legally can have nukes. This deal cost billions in cash which finance terrorism and Iran’s missile force. Trump cancelled this Idiotic deal. Dems with sclerosis should live near hospitals.
Well your messiah wants to give Iran $30 billion. How do you like those uranium apples?
https://www.cnbc.com/2025/06/28/trump-administration-exploring-30-billion-civilian-nuclear-deal-for-iran.html
You can always tell the true MAGA when they bring up Obama. MPO45 just schooled you with a news link. All the conservative shows were criticizing this same previous Obama ‘deal’ with Iran after Trump showed Iran how it’s done (with military strikes).
Now that Trump knows his strikes didn’t do all he promised, he’s making the same deal, but way bigger than Obama. Greasing palms is one major way to keep people civilized. But it only works for MAGA when Trump does it.
Sad, you’re being taken again by a different politician. Wake up
Trump broke the Obama deal during his first term and allowed the current development of nukes, so spare us your incoherent blather!
Irans missile force is irrelevant and they surrendered rather than be turned into another GAZA.
Trump and Israel both bombed nuclear sites in violation of the Geneva Convention so do not expect China or Russia to exercise restraint when/if the time comes.
We no longer have the moral high ground to stand on. Thank you very little Donald Duck Trump (DDT).
Hey! I just coined “DDT” as a reference for our self proclaimed dictator in chief!
>
Digital products is US manufacturing.
Waiting for Mish to address the recent court rulings.
Oh look, TDS addled thread. Lions, tigers, bears oh my! Misdirection is always a part of negotiation. Sun Tzu etc. Oh, but he said this! Lol.
Fail
You have to change your name to BurritoMan because Trump has a twenty-foot burrito that explodes now.
You’re ok now MAGA but your god is insane and he will be coming for you too. FAFO will make you cry like a baby.
86/47
The TACO trade: Trump glues red and blue. Trump protects the liberal elite who tried to impeach him. His former enemies are becoming his new friends.
Trump deports illegal immigrants to protect poor minorities in dems and red states.
The elite and the bottom of the income are moving to his side. He dismantles Hakeem’s100Y uniparty, which protect criminals, terrorists and suboteurs. He dismantled sclerotic bureaucracy and restored our national honor.
Sure, Jan.
It’s a good start.
TACO.
Well done.
You did it.
“Then again, one truly has to wonder.” Really about what?
Trump is mentally ill, nuff said.
86/47
Trump loves pussycats.
Biden loves dogs that bite people.
Trump seems to have learned his negotiation tactics from the New York mob in the 1970s and 1980s. One mob negotiation axiom is to always keep the other side off balance by striking fear and chaos. While this may make sense in a mob context, as a trade negotiation tactics this non-cooperative approach is ultimately self-defeating because Trump will be unable to make any credible commitments, and he will end up with prisoner dilemma outcomes where everybody loses out relative to much better trade agreements.
He learnt them from his father:
“You have to do what I say if you know what’s good for you, because I’m much bigger, you little piece of sh¡t.”
I was noticing how he sounds more like a mobster lately. He says “wanna” a lot now.
“Yah prefah a Hah-vahd accent?”
Michael Every said on trade with Canada this morning that is Asia there is a saying ‘Kill the chicken to scare the monkey’. Very appropriate now.
I’m not going to cry over Amazon, Apple, Meta, X etc being forced to pay taxes.
These evil companies are getting away with murder. I would, if I were czar or all czars, implement a tax on revenue.
Taxing the digital service companies is ok but collecting taxes from them retroactively is rather unfair in my opinion. It is not like they were engaged in tax evasion but no matter. If Canada wants it then so be it. Trump could use this as a reason to remove the banking license for retail banking from TD Bank Group and BMO. Since American banks are forbidden by Canadian law to offer retail banking services to Canadians there is no reason to allow Canadian banks to offer retail banking services to Americans. I don’t mind them protecting their banking industry through regulation from US banks but I see no reason why we should give Canadian banks a free ride in the US especially since they have become centers for money laundering.
The law has been in effect for a while but the tax had not been collected
These companies had notice that they should set aside the money
Now’s the time to send the money
OTH, if Trump had proved to be a reliable and attentive negotiator, it might have never happened. This is all finger-pointing on Trump’s part.
That’s the new meme that has cropped up in the last week. “If only Trump had asked nicely….”. It’s total bull of course.
Lol! You need to stop drinking the Kool-Aid. How about sticking to the facts?
First:
When Canada drafted their law in 2021 the world’s large Digital Services companies were told to begin provisioning for a 3% digital services tax on their Canadian revenues exceeding $20 million in 2022 and going forward. They were told that once the law was formally implemented that it would apply from 2022 forward. This is no surprise to any of these companies.
The tax applies to all large digital service companies worldwide. It is NOT specifically targeted at the US. And It is similar to what many countries are already doing.
Second:
There is nothing stopping foreign banks from operating in Canada. There are 26 foreign bank subsidiaries and 19 full-service foreign bank branches operating in Canada. It is a myth that foreign banks (including US banks) are prevented from operating in Canada. For example, Citibank has been operating in Canada for 106 years.
The reason only 19 of them choose to offer full service retail is because it is a rather small market with a lot of competition. They can make more money with subsidiaries.
He can’t stop drinking the kool-aid because the mentally ill are stuck in an endless loop of insanity. The case is made day by day here by many commenters.
Didn’t Doug say he had a career in finance? Must be a lie. How else could you explain his total lack of knowledge in these matters.
He said he studied virology and microbiology and I guess finance and engineering and mathematics and studied at Oxford.
Here’s a clip of Doug78 that gives you the full history.
https://www.youtube.com/watch?v=ZgAf9AuNc6Q
I switched careers lured by the prospect of the money. You find many people in finance got there by switching careers and most of them can from STEM. If you had been in the business you would know that. STEM is especially strong in hedge funds.
Now I see you know nothing of microbiology nor finance. Microbiology at the graduate level uses lots of math, statistics and modeling. The finance part is the easiest part to pick up because you already know the tools.
Here is a clip of you.
https://c.tenor.com/lWlURy974uIAAAAd/milton-basement.gif
You talk like an investor who knows how to read a balance sheet and a P/L and trade but has no experience in actual finance from the originator point of view. You are like a mechanic that can tune a motor but has no idea how a car is made.
There you go again not reading before typing. I said fine if Canada wants to tax the services because it is their business. For the banking you didn’t read either. I said RETAIL banking which is different from corporate banking and wealth management and requires a different banking license. Canadian, American and European banks work in one another’s territory without problem in corporate and wealth management. However Canada prevents American banks from offering RETAIL services to Canadians while Canadian banks do good business with American retail clients. It’s about $25 billion USD. This is an asymmetry that we didn’t care about before but maybe now we do care about it.
You must be dyslexic because you keep missing key words in my comments. Additionally you clearly do not know anything about banking so it’s better you stick with oil and gas rather than making a fool of yourself talking about something you are not familiar with. Please pay attention next time.
Lol! Too late to change your words. And even when I quote you, you try to squirm out of it.
You said: “ Since American banks are forbidden by Canadian law to offer retail banking services to Canadians there is no reason to allow Canadian banks to offer retail banking services to Americans.”
And again:
“ Canada prevents American banks from offering RETAIL services to Canadians while Canadian banks do good business with American retail clients”
Totally false. Total bullshit. You don’t know what you are talking about.
As usual.
Read Canada’s Bank Act of 1980 instead of saying falsehoods and then come back.
I have a better idea. Why don’t you contact all the foreign banks that do retail banking in Canada (at least 15 of them, including Citibank), and tell them that they are breaking Canadian law. Poor Citibank has been breaking Canadian law for 106 years now.
Then tell me what their responses are.
Just wondering. If it was drafted in 2022 & the affected companies were told to get ready in 2022, what was the delay with pulling the trigger?
Not that it really matters, but if this was already planned, then it doesn’t have anything to do with Trump’s Canadian tariff war.
But, I would like to know why it’s taking them 3 years to go live.
Because it was always to be used in trade negotiations at the right time.
Canada first proposed its digital services tax (DST) during the 2019 federal election campaign, when the Liberal Party pledged to introduce a 3% tax on revenue earned by large digital companies from Canadian users. The idea was later formalized in the 2020 Fall Economic Statement, and draft legislation was released in December 2021. However, implementation was delayed to allow time for international negotiations on a global tax framework. When those talks stalled, Canada moved forward with its own plan, which ultimately became law in 2024.
did not Trump state on April 9 that in 90 days the tariffs will kick in?
He says a lot of things. And then he changes what he says. Sometimes within a few minutes.
There’s no point believing anything he says.
That’s only because he does not know himself what he will say on a forward basis, and he has trouble keeping track of all his statements, because they gush forth spontaneously depending on the context.
But rest assured, there is a constant:
It’s all genius, great, beautiful, and the best ever.
He certainly meant it when he told Iran they had 60 days. Legit.
The funny thing is that you’re complaining about Trump’s tendency to exaggerate with your own exaggeration.
it would be nice if you provided more knowledge and awareness than reading news articles than are less than accurate. I am not sure you are aware of extraterritorial taxation which directly inpacts digital service taxation
Rather than complaining, why don’t you just enlighten us?
Start 17 min in, all the way to the end.
Shaun Newman (Canada) – Jack Kruse
https://m.youtube.com/watch?v=O_NY-8L7qVA
Lol. You can take everything this guy is saying and apply it to the U.S. Interesting times. He is advocating for a Canada exit strategy.
Canada is cheating by expecting USA tech companies to pay Retroactive taxes on Income going back to 2022 especially when Canada only created this Tax Law in 2024. Beyond rediculous when the Industry estimates the 2022 back tax payments could total $3 billion. So the Donald is right in refusing to accept such an unfairly created tax by Canada on these American companies.
Ex-post facto is not permitted by the US Constitution. I don’t know if Canada’s Constitution has an ex-post facto clause, probably yes. Agreeing to anything that resembles an ex-post facto situation would set a very bad precedent. Maybe pointing out in a calm tone what is being asked is unconstitutional and to make a better offer would keep negotiations going.
Canada, like Britain, do not have a constitution
Ex post facto taxation exposes that a government truly is a criminal enterprise.
Nope. Not cheating at all.
Many countries have Digital Services taxes and the large Digital Services companies around the world have been paying these taxes for many years now. These companies were also aware of Canada’s tax plan for the last 6 years and have been actively opposing it. But they were all well informed that this tax was coming and that it would be retroactive to 2022.
Canada first proposed its digital services tax (DST) during the 2019 federal election campaign, when the Liberal Party pledged to introduce a 3% tax on revenue earned by large digital companies from Canadian users. The idea was later formalized in the 2020 Fall Economic Statement, and draft legislation was released in December 2021. However, implementation was delayed to allow time for international negotiations on a global tax framework. When those talks stalled, Canada moved forward with its own plan, which ultimately became law in 2024.
It’s like companies charging an extra 3-5% for using a credit card. Just build in the 3-5% cost into the rate & don’t charge extra. I’m fine with them banking the money, if someone pays with a debit card.
There’s no doubt that digital taxation is the wave of the future for all these liberal / socialist countries.
Digital service companies compete with other companies that are subject to taxation. Amazon grew large by avoiding sales taxes. These kind of corporations are always engaged in passing on costs to other parties, turning costs into externalities, avoiding taxes that others have to pay, cornering markets in any way they can get away with, and always pretending they are creating so much value.
They should not get away with all the preferential treatment.
We should lower taxes on non-preferential companies. Governments already get too much money, they are literally shoveling tax money to their supporters…”Quick put up a green website so we can give you 10 million!”.
”Quick put up a green website so we can give you 10 million!” If only this were true. Show proof please, I’d like my 10M.
86/47
TACO is all hot air and no do. He is mad at Canada because they didn’t want to become the 51st state. He will end up capitulating like he has on every other trade “discussion” he has participated.
You have to give him credit for being consistent.
Hahahaha!
90 deals; 150 deals; 200 deals! What a huge load of BS.
So far one tiny meaningless deal with the UK. And Trump still has tariffs in effect on the UK. I guess that’s to penalize them because we run a trade surplus with them!
And the UK still has their digital services tax in place. Lol! Where is Trump’s outrage with that!
Plus, the Whitehouse now says that July 9 is no longer a tariff and trade deadline. TACO man strikes again.
I’m looking forward to seeing Trump’s new “tariff number” on Canada, now that he has broken off negotiations. I wonder what items he will put it on?
What happened is that Canada decided it doesn’t trust the TACO moniker, and whimpered “Please No”. I guess the thought of unemployment hitting 22% in Canada brought them into a more or less state of reality.