‘We have all the cards’: Trump ending all trade talks with Canada ‘immediately’ over digital services tax

Political commentator Tom Mulcair reacts to Trump ending trade negotiations with Canada, saying its a sign a deal could be close.

U.S. President Donald Trump says his team is ending all trade talks with Canada, “effective immediately,” citing disagreement over Canada’s controversial digital services tax as the reason for shutting down negotiations.

He made the announcement in a post Friday on Truth Social, calling the levy “a direct and blatant attack” on the U.S. and its technology companies.

Trump’s announcement is a wrench in ongoing trade discussions between the two countries, which have been in the throes of a trade war for months, since the president’s first slate of tariffs on Canadian goods in February.

Trump has since levied a series of sweeping and stacked tariffs on Canadian products, targeting a range of industries. Canadian countermeasures are also in place.

Prime Minister Mark Carney, meanwhile, held a closed-to-media meeting with members of the Prime Minister’s Council on Canada-U.S. Relations earlier Friday.

On his way out of the meeting, the prime minister told reporters he had not spoken with the president since the latter posted to Truth Social.

“The Canadian government will continue to engage in these complex negotiations with the United States in the best interests of Canadian workers and businesses,” reads a statement from the Prime Minister’s Office Friday afternoon.

Following the G7 meetings in Kananaskis, Alta. earlier this month, Trump and Carney said they would pursue negotiations toward a new trade and security deal by mid-July, a 30-day deadline from their discussions in the Rockies.

Trump, however, now says he’s ending the talks.

“We will let Canada know the Tariff that they will be paying to do business with the United States of America within the next seven-day period,” Trump wrote in his Truth Social post.

Speaking to reporters in the Oval Office Friday afternoon, Trump initially refused to answer a question about Canada, saying he was dealing with a “much more important subject,” signing a peace agreement between Rwanda and the Democratic Republic of the Congo.

When he was asked again about trade negotiations, however, he said: “Canada has been a very difficult country to deal with over the years,” and calling the government “foolish” for implementing the tax.

“They put a tax on companies that were American companies that they shouldn’t. A very, very severe tax,” Trump said. “And, yeah, I guess they could remove it. They will. But I mean, it doesn’t matter to me.”

“We have all the cards. We have all the cards,” he added. “You know, we do a lot of business with Canada, but relatively little. They do most of their businesses with us. And when you have that circumstance, you treat people better.”

Digital services tax ‘discriminatory’: former U.S. trade rep

The tax — first pitched by the Liberals in their 2021 budget — sees the federal government impose a three per cent levy on revenues over $20 million from tech giants earning money off Canadian content and Canadian users.

It has been deeply unpopular and widely criticized by American lawmakers for years. They argue the policy disproportionately impacts U.S. companies, with former Biden administration U.S. trade representative Katherine Tai calling the levy “discriminatory.”

The first payment of the tax is due Monday and will charge retroactively to 2022.

In an interview on CTV’s Question Period in December, former Liberal finance minister Bill Morneau told host Vassy Kapelos that if the Canadian government wanted to make headway with the U.S. administration, it should look at scrapping some sticking-point policies, namely the digital services tax.

Feds standing by controversial tax

Asked about the levy by reporters on Parliament Hill last week, Finance Minister François-Philippe Champagne said the government was still planning to “go ahead” with the digital services tax.

In French, asked whether his government is willing to scrap the tax, Champagne said “we’re not there at all.” He added the tax was a topic of conversation at the G7 meeting earlier this month, and called it a “neutral” tax, which “isn’t directed toward any particular country.”

Foreign Affairs Minister Anita Anand said in an interview with CTV News Friday that Canada will continue to “press in terms of Canadian interests.”

“I want to stress that our negotiations occur behind closed doors for a reason, that we need to continue to ensure that Canadian interests are protected at every turn, and we are disadvantaged if we continue to share strategy externally with the media,” Anand said. “But, I will say that the guiding principle of these negotiations is to ensure that these unjustified tariffs are removed, and that is our fundamental starting point.”

Anand also pointed to the U.K. and France having digital services taxes of their own, an argument often cited by the previous Liberal government under former prime minister Justin Trudeau when faced with criticisms of the policy.

Tax should be ‘expendable’ in negotiations: Manley

In a statement to CTV News, Business Council of Canada president and CEO Goldy Hyder said his organization has been calling for the federal government to scrap the tax for years.

“Bottom line is, (Internal Trade Minister) Chrystia Freeland, when she was finance minister, booked the revenues, and now they’re due,” Hyder said. “And these American companies have been asking that we align with the OECD and determine how to manage this.”

Hyder said he’s been in contact with Champagne about the business council’s position on the tax, and while he wouldn’t divulge the contents of those conversations, said “suffice to say, he has no intention of removing it.”

“And, if we were bluffing, the bluff just got called, and we’ve got to midnight Monday to get through this,” Hyder added.

Meanwhile, former Liberal finance minister John Manley said Canada should “keep calm and carry on” in the face of Trump’s reversal, telling CTV News “it’s not a trade negotiation unless somebody throws a tantrum.”

“We’re dealing with Donald Trump, after all,” he said.

Manley said the Carney government should be willing to concede the digital services tax if it gets the two countries closer to a deal, calling the levy “expendable,” but adding negotiators should hold out until there are concessions from the U.S. side before putting the levy on the table.

“If you’ve got something in a negotiation that you’re willing to give up, you don’t offer that off the top,” he said. “You hold back for the end.”

The parliamentary budget officer has estimated the tax will generate $7.2 billion in revenues for the federal government over five years.

With files from CTV News’ Judy Trinh and Luca Caruso-Moro