On the 27th local time, US President Trump said,As Canada moves forward with implementing digital services tax, he decidedTerminate immediatelyAll trade negotiations with Canada and new tariffs on Canada will be announced in the coming week. Trump claimed: “Canada has imposed dairy tariffs of up to 400% on our farmers for many years, and now it has announced that it will impose a digital services tax on American technology companies. This is a direct and naked attack on our country.”
Trump expressed dissatisfaction with this, saying: "They are obviously following the EU, and the EU has taken the same measures, and (the EU) is currently consulting with us."
Trump wrote on social media, "Based on this extremely excessive tax, we will immediately terminate all trade negotiations with Canada. We willNotify Canada within seven days, the tariffs they pay to trade with the United States. "
Last year, trade in goods and services between Canada and the United States exceeded $900 billion. Canadian Prime Minister Mark Carney, speaking briefly to a television reporter, said he had not spoken to Trump on Friday. He said, "We will continue to conduct these complex negotiations in the best interests of Canadians. "
The Canadian dollar fell in response, falling more than 0.5%. Canada's benchmark stock index also fell, with shares of companies that rely on cross-border trade also suffering, including General Motors Co. and apparel maker Canada Goose Holdings.
Canadian business groups and some politicians quickly pressured Carney to abandon the digital tax after Trump's post.
"To get trade talks back on track, Canada should immediately table a proposal to eliminate the digital services tax in exchange for the removal of U.S. tariffs," said Goldy Hyder, CEO of the Business Council of Canada.
Ontario Premier Doug Ford reiterated to the Prime Minister that digital taxes should be abandoned.
Canada’s digital services tax is not new. The tax law was enacted a year ago, but companies have not yet started paying.
Canada's Finance Ministry said earlier on Friday that the country is preparing to move forward with the collection of a digital tax, with the first payment due next Monday. Local business groups opposed the tax, saying it would raise the cost of services and invite U.S. retaliation.
Earlier this month, 21 U.S. lawmakers wrote to Trump calling for a push to repeal the tax, which they estimated would cost U.S. companies $2 billion. Trump has long opposed digital taxes and other non-tariff barriers, arguing that they hinder U.S. exports.
Canadian Finance Minister Francois-Philippe Champagne told reporters last week that digital taxes could be renegotiated as part of U.S.-Canada trade talks.