U.S.-Canada Tensions Flare Over Digital Tax
Just as relations seemed stable, a new dispute has erupted between close allies Canada and the U.S., triggered by Canada’s new 3% digital services tax on large tech firms like Amazon, Google, and Meta — retroactive to 2022. The tax could cost U.S. companies up to $2 billion.
President Trump, calling it a “blatant attack,” lashed out on Truth Social, accusing Canada of unfair trade practices and halting all trade talks. He warned of new tariffs and said Canada was “foolish” to proceed.
Canadian Prime Minister Mark Carney responded calmly, saying negotiations would continue in Canada’s best interest. Despite the tension, a private call between the two leaders on Sunday led to Canada walking back the tax, just before payments were due.
Ottawa said the move anticipates a renewed trade agreement by July 2025, following discussions at the recent G7 summit. Trump also took the opportunity to criticize Europe for similar taxes, emphasizing U.S. dominance in trade talks.