Just when tensions seemed to cool, a new clash has erupted between two close allies — the U.S. and Canada.
President Donald Trump is accusing Canada of a “blatant attack” over its new 3% digital services tax on major U.S. tech companies like Amazon and Google, retroactive to 2022. The move could cost American firms up to $2 billion, due by the end of June.
Trump fired back on Truth Social, calling Canada “very difficult to trade with,” and announced a freeze on trade talks. “We’ll let Canada know the tariff they’ll be paying,” he warned.
Prime Minister Mark Carney remained calm, saying Canada would continue talks “in the best interests of Canadians.” But Trump doubled down, saying Canada had made a “foolish” move and should remove the tax.
U.S. lawmakers backed Trump, calling the retroactive tax an “unprecedented” and discriminatory cash grab. Trump also slammed Europe for similar taxes, insisting only the U.S. should penalize its own firms.
After a tense phone call between Trump and Carney on Sunday night, Canada backed down, pausing the tax ahead of its July 1 deadline. Ottawa said the move supports renewed trade talks aiming for a July 2025 agreement.