The US President, Donald Trump, announced that he terminated all trade talks with Canada, after Ottawa imposed a digital services tax on American technology firms.
Trump’s announcement came hours after the US reached a deal with China to speed up rare-earth supplies’ flow into the US, reported Reuters.
Surprise Announcement
On Friday, Trump said that the US had ended its trade negotiations with Canada over what he called a “blatant attack” on his country, announcing that he would set a new tariff on Canadian goods within the next seven days.
“We have just been informed that Canada, a very difficult Country to TRADE with, including the fact that they have charged our Farmers as much as 400% Tariffs, for years, on Dairy Products, has just announced that they are putting a Digital Services Tax on our American Technology Companies, which is a direct and blatant attack on our Country,” he said.
“They are obviously copying the European Union, which has done the same thing, and is currently under discussion with us, also,” Trump posed on Truth Social.
“Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately. 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 said.
US-Canada Trade Talks
The US and Canada have been negotiating over a trade deal for months. Canada is the US’ second largest trade partner after Mexico and the largest buyer of US exports. According to US Census Bureau data, Canada imported $349.4 billion of US goods in 2024 and exported $412.7 billion to the US.
In February 2025, Trump imposed tariffs on imports from Mexico, Canada and China, over the flow of drugs and undocumented immigrants from those countries to the US, prompting the countries to respond with retaliatory measures.
The Canadian Prime Minister, Mark Carney, met with Trump at the G7 summit of world leaders in Alberta in mid-June, where both leaders agreed to pursue negotiations to reach a new economic deal within a month period.
Canada Response
After Trump’s surprise announcement, Carney’s office said that the government would resume negotiations with the US to resolve the dispute.
“The Canadian government will continue to engage in these complex negotiations with the United States in the best interests of Canadian workers and businesses,” it said.
Further US Actions
However, the US President told reporters at the White House that Washington would not resume negotiations with Ottawa “until they straighten out their act,” adding that the US holds “such power over Canada.”
Furthermore, the US Treasury Secretary, Scott Bessent, downplayed the trade dispute between the US and Canada, during an interview with CNBC.
He suggested that that the US Trade Representative, Jamieson Greer, would probably pursue a Section 301 probe into Canada’s digital tax, which would pave the way for the US to impose retaliatory tariffs amounting to the approximately $2 billion in losses incurred by American companies.
US-China Deal
On Friday, Bessent announced that Washington and Beijing had reached a trade agreement that would speed up American firms’ access to rare earth minerals from China, according to the Associated Press (AP). He said that the agreement would reduce tariffs and ease the flow of rare-earth magnets to US companies.
Two weeks ago, Trump said that Washington and Beijing had finalized a deal, which would grant the US access to the rare-earth metals it needs, while the Chinese college students would be able to attend American universities. The agreement followed talks between American and Chinese officials in London and Geneva.
The Chinese Commerce Ministry confirmed the deal on Friday. “China will, in accordance with the law, review and approve eligible export applications for controlled items. In turn, the United States will lift a series of restrictive measures it had imposed on China,” it said.
More Deals Coming
Trump has set July 9, 2025 as a date for countries to reach trade deals with the US to avoid facing more tariffs. However, the Trump administration has indicated that this deadline is flexible and could be extended.
Earlier on Friday, Bessent said that the Trump administration is engaging in trade talks with 18 top trade partners, including the European Union (EU) and India, adding that new deals could be finalized by the Labor Day holiday on September 1.
“We have 18 important trading partners. … If we can ink 10 or 12 of the important 18, there are another important 20 relationships, then I think we could have trade wrapped up by Labor Day,” he told Fox Business Network.
