President Trump stated that the United States would immediately halt all trade talks with Canada due to the country's plans to impose digital services taxes on American tech giants.
Trump described these taxes as an «outright attack» and promised on social media that within the next seven days he would inform Canada about the tariffs «it will pay for doing business with the United States of America».
Canada's Finance Minister stated last week that the Canadian government had explained this tax to their American counterparts during «quite long and extensive discussions» at the G7 summit, as well as earlier during meetings in Washington. «We will continue these discussions and stand by our position», — said François-Philippe Champagne to reporters.
By halting the talks, the president once again exacerbated the already tense relations between the USA and Canada, which has traditionally been one of America's closest allies and largest trading partners.
The two countries were on the path to announcing a trade agreement after holding lengthy negotiations on the sidelines of the G7 summit in early June. Canada and the United States announced earlier this month that they would conclude a new trade agreement «within 30 days», specifically around July 20. However, on Friday, Trump made it clear that he was nullifying all agreements.
«We have all the cards in our hands. Every single one», — Trump stated in the Oval Office, adding that «economically, we have enormous leverage over Canada».
A statement from the office of Canadian Prime Minister Mark Carney says that his government «will continue to engage in these complex negotiations with the United States in the interests of Canadian workers and businesses».
As reported by The New York Times, Trump's decision to raise tariffs on goods from North America could cause chaos on both sides of the border, as American companies and consumers face rising import costs. Financial markets briefly reacted to the breakdown of talks with a decline, but the S&P 500 index recovered and reached a new high on Friday.
The three-percent digital services tax in Canada has been in effect since last year, but the first payments are due only from Monday. Since the tax is retroactive, American companies were preparing to pay the Canadian government about 2.7 billion dollars, according to data from a trade group of major American tech companies.
American officials from both parties have long been dissatisfied with the taxes imposed by Canada, calling them unfair to the services provided by American companies such as Google, Apple, and Amazon.
The digital services tax is just one of many issues in the trade relations between the two countries. At various times, Trump has complained, for example, about barriers preventing American companies from competing in the country's dairy and banking industries. The US president has also repeatedly voiced the idea of turning Canada into the 51st state, which Canadian officials have repeatedly rejected.
The US government previously announced a 25-percent tariff on all Canadian exports, except for goods covered by the trade agreement with Canada and Mexico, concluded during Trump's first term. Like other countries, Canada is also subject to a 50-percent tariff on steel and aluminum exports.
Photo: AP