U.S. President Donald Trump says he's terminating all trade talks with Canada, blaming it on the country's new digital services tax on technology companies.

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Donald Trump has signed an order to impose tariffs imports into the U.S. from countries including China, Mexico and Canada.

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U.S. President Donald Trump has announced the termination of all trade talks with Canada, attributing the decision to Canada's digital services tax, which targets major technology companies such as Amazon, Meta, and Google. Trump stated that Canada will be informed of new tariffs on business with the United States within a week. 

Canadian Prime Minister Mark Carney responded by emphasizing the government's commitment to negotiating in the best interests of Canadians. The announcement caused immediate market reactions, with the Canadian dollar initially falling before partially recovering. The Canadian economy recently recorded a slight contraction, highlighting the ongoing impact of trade uncertainty.

Trump terminates trade talks with Canada ‘effective immediately’

Have you spoken to the president today yet, sir? Prime Minister Mark Carney addressing another Trump trade blow. The U.S. president calling off trade talks with Canada. We'll continue to conduct these complex negotiations in the best interest of Canadians. It's a negotiation. Donald Trump lashed out on Truth Social, saying because of Canada's egregious digital services tax, the U.S. is terminating all discussions on trade with Canada and 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. In the Oval Office, he doubled down. We have such power over Canada. I'd rather not use it, but they did something with our tech companies. Canada's digital services tax became law last year. It taxes tech giants like Amazon, Meta and Google on digital revenue. The first payment is due Monday. American companies are set to pay about $2 billion U.S. We were hoping as a sign of goodwill that the new Carney administration would at least put a break on that during the trade talks. They seem not to have. The U.S. was going to take a run at this and really has had a beef with Canada on this issue for a really long time. They really had no choice but to really escalate that issue at the last minute now. This snag comes 12 days after Carney said he's looking for a deal to end the trade war within a month. President Trump and I agreed to continue to pursue those negotiations, intensify them towards a deal within the coming 30 days. Some warn this threat is just how Trump operates. This is a moment in a long, tough negotiation that's very public, but also I think we all have to understand that that might be tactically, a tactical move by our counterparty. Up until very recently, Canadian officials were saying they thought discussions were progressing and talks were going well, but this goes to show how quickly things can change when dealing with Donald Trump. And if this is a negotiating tactic, how likely is it, Kate, that Canada could press pause on the digital services tax? It's possible. Mark Carney has said some things are off the table. For example, in Friday's social media post, Trump also took aim at Canada's protections on the dairy sector, known as supply management. That has been a long-time trade irritant with the United States, but Carney has said it's not something they're willing to concede on in trade negotiations. He hasn't made a similar promise when it comes to the digital services tax. All right. Thanks for this, Kate McKenna in Ottawa. Let's bring in Peter Armstrong, our senior business correspondent. Peter, how are the markets reacting to Trump's comments? Yeah, initially not well. The loonie fell off a cliff when Trump's social media post came out. But look at how it reacted through the rest of the afternoon, right? The dollar climbed back, not all the way to be sure, but traders are telling us something here with that rebound. And I think what they're saying is that they're not convinced this is a full breakdown, but rather some part of these ongoing negotiations. And Peter, we also have Canadian GDP numbers out this morning. How did they fit into this latest development? Yeah, I think those numbers are an important part of this development, right? They showed the Canadian economy shrank slightly in April. But think about that. We're talking about the peak of the trade volatility. When the tariff rate was at its highest, when the uncertainty was off the charts, the Canadian economy contracted by just 0.1%. If somebody had told you in March that amidst all those threats and all the concern that Canada could weather the worst of that storm and only see a 0.1% contraction, I think most of us would have taken that trade. So today's news is a new threat. It is possibly a new fork in this very windy road we've been on. But it's also a reminder of how high the stakes are in these negotiations and the threats that have been quiet lately, but they never really went away. All right, Peter, thanks for this. Peter Armstrong in Toronto tonight.

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Trump terminates trade talks with Canada ‘effective immediately’

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