Trump ends trade talks with Canada, citing ‘egregious’ digital-services tax, straining already tense relations further.

President Trump announced the termination of trade talks with Canada, blaming the country’s digital-services tax on U.S. tech companies. This decision further complicates the already tense relationship between the two nations.

The negotiations aimed at establishing a new trade deal had been ongoing for several months. Last week, Trump and newly elected Canadian Prime Minister Mark Carney had a contentious meeting regarding dairy tariffs and the digital tax at the G-7 summit.

According to a senior U.S. official, Trump was angered by Canada’s refusal to eliminate the digital-services tax, which imposes significant costs on U.S. tech firms. Canada plans to begin collecting these taxes shortly, which could cost American companies billions of dollars.

Tech industry groups have urged action from the Trump administration, fearing that other countries may adopt similar measures. Major companies affected include Google, Meta, and Amazon. Calls for investigations into Canada’s trade practices have emerged in response to the tax.

Despite the pressure, Canada’s government, led by Finance Minister François-Philippe Champagne, remains firm on retaining the tax. This standoff takes place against a backdrop of existing tariffs on steel, aluminum, and dairy products affecting trade between the two countries.

Carney has expressed a willingness to continue discussions, while the importance of U.S.-Canada trade to Canada’s economy remains a central concern.