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Donald Trump said the US was “terminating” trade talks with Canada in retaliation against a new digital services tax on tech companies, reopening a trade war between the countries after months of détente.
“Canada, a very difficult Country to TRADE with . . . 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,” the US president posted on his Truth Social platform.
“Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately,” Trump said, adding that he would set a new tariff rate on Canadian imports “within the next seven day period”.
The announcement reignites a trade war with the US’s northern neighbour, ending a period of more cordial relations that followed the election of Mark Carney as Canadian prime minister.
A spokesperson for Carney said on Friday that they were reviewing president Trump’s post “at the same time as everyone” and would respond as soon as possible.
Earlier this month, finance minister François-Philippe Champagne said the government was “going ahead” with the digital services tax despite it being a major irritant for the Trump administration.
The measure would hit tech groups with a 3 per cent levy on revenue earned from Canadian users, and has been opposed by Silicon Valley.
The Canadian dollar fell on the announcement, leaving it down 0.7 per cent against the US dollar on the day. Trump’s statement also knocked the S&P 500 from its highs of the day, but the blue-chip index remained up about 0.2 per cent.
Tensions have also been simmering between the two counties over Canadian agricultural policy.
Canada recently passed legislation on “supply management” measures that protects its dairy industry with price setting and production quotas. In 2017, during his first presidency, Trump described this system as a “disgrace”.
“They have charged our Farmers as much as 400% Tariffs, for years, on Dairy Products,” Trump wrote in his Truth Social post on Friday.
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