Trump announces termination of trade talks with Canada after Canada imposes electronic services tax on US tech companies, accusing Canada of emulating EU's 'atrocious' tax policy

US President Donald Trump has announced the immediate termination of all trade negotiations with Canada. He also warned that new customs duties will be imposed on Canadian goods and services within this week. In return for Canada's implementation of the Electronic Services Tax (DST) on American technology companies, Trump has said that he will stop trade negotiations with Canada. He alleges that Canada has followed the 'atrocious' tax policy of the European Union.

Companies like Amazon, Google, Meta, Air BnB are approaching the date to make the first payment for DST in Canada by June 30. If the global income is 750 million dollars or more and the domestic and foreign technology companies that earn more than 20 million dollars in annual profit in Canada, it is arranged that 3 percent of the total income for digital services tax should be paid by DST. Nepal has also been imposing DST of 2 percent of annual turnover on such technology companies.

Trump, who announced a trade agreement with China only on Thursday evening, expressed his anger with Canada on the social media platform 'Truth Social' on Friday. "We have just received information about the announcement of the imposition of DST on American technology companies," Trump wrote on social media. "This is a direct and open attack on our country." On Friday, at the Oval Office event, he expressed that America has a very big influence over Canada. Trump comments that Canada has shown 'stupidity' by taxing digital services. Trump has said that all negotiations with the US will stop until Canada corrects its behavior. According to the tax system passed by Canada in June 2024, American technology companies will have to submit the first payment to the Canadian government next Monday.

Canada has not responded to Trump's announcement to end trade talks. But before that, in an event on Thursday, Canadian Finance Minister Francois Philippe Champagne clarified that the tax filing date will not be postponed. He said that despite strong opposition from the US this month, the digital service tax will not be stopped. US Finance Minister Scott Besant has also called this tax "unfair". He also said that the Canadian government expects the Trump administration to suspend this tax "as a goodwill gesture". According to

Besant, Trump's trade representative, Jameson Greer, is now expected to launch an investigation into unfair trade practices under Section 301 of the US Trade Act of 1974. Besant says Greer will study the damage to Americans caused by Canada's new taxes. Canada's largest trading partner, the US, is analyzing whether it will increase taxes on Canadian products or impose trade restrictions, which will have a serious impact on Canada's economy.

Under the digital service tax, domestic and foreign technology companies providing services in Canada must register with the Canada Revenue Agency (CRA) by January 31, 2025, and file their first DST on June 30. CRA said that more than 500 companies have been registered. More than 100 of them have expected to pay taxes. If the companies are not registered with the agency, they will be fined $20,000 annually.

Various countries including Nepal have implemented digital service tax. Half of European countries have implemented or proposed DST, according to Tax Foundation Europe. The US has threatened to increase tariffs in response to those proposals. Trump has criticized the country for taxing companies like Google and Meta. He says that he is not in favor of allowing foreign governments to use America's big taxpayers for their own benefit.

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Trade agreement between the US and China

US President Donald Trump on Wednesday announced the completion of a trade agreement with China to resolve the months-long dispute regarding the export of rare minerals and trade tariffs. The agreement was reached after several high-level talks in London last week. It is seen as an important step towards reducing tensions between the world's two largest economies. The US Finance Minister and the Chinese Ministry of Commerce have also confirmed this agreement.

"Everything about this agreement has been decided," Trump wrote on Truth Social, "only the official final decision by President Xi and myself remains." As mentioned in the

agreement, China will maintain the current 10 percent additional tariff on American goods. The US will also keep the 55 percent additional tariff on Chinese goods. The agreement also includes speeding up the process of rare minerals and magnetic materials exported from China to America. These minerals and materials are mentioned as part of the indispensable supply chain for everything from vehicles to defense and military sectors.

"We are sure that the supply of goods will be regular according to the agreement," US Finance Minister Scott Besant said while confirming the agreement. He mentioned that this achievement was made possible by the direct telephone conversation between Trump and Chinese President Xi Jinping, and because of that, the talks started again in London. This agreement is based on the initial agreement reached in Geneva last month. There, both sides agreed to temporarily suspend retaliatory additional tariffs that had reached over 100 percent. At that time, the US tariff was 145 percent and the Chinese tariff was 125 percent. The Geneva agreement reduced them to 30 and 10 percent respectively.

China's Ministry of Commerce has confirmed the format of the agreement on Friday and said that 'export permits for goods subject to strict laws will be approved'. However, the ministry has not clearly mentioned the names of rare minerals.