PM says negotiations continue as Trump says he’s ending trade talks over digital tax

By Canadian Press on June 27, 2025.

OTTAWA — Prime Minister Mark Carney says he did not speak Friday with Donald Trump before the U.S. president announced a sudden end to trade negotiations in response to Ottawa’s plans to push ahead with a digital services tax at the end of the month.

Trump wrote on his platform Truth Social that he was “terminating all discussions on trade with Canada” because of the tax, set to apply next Monday to major American online companies such as Amazon, Google and Airbnb.

Trump wrote Friday afternoon that Washington will notify Canada about new tariff rates required “to do business with the United States” within the next week.

An hour later, Carney told reporters he had not spoken with Trump that day.

“We’ll continue to conduct these complex negotiations in the best interests of Canadians,” the prime minister said.

Trump called the proposed tax a “direct and blatant attack on our country.”

Carney has been negotiating in private with Trump and said earlier this month the two governments are pursuing a deal to end the president’s stop-and-go tariff war. At the G7 summit in Alberta, Carney and Trump agreed to work on reaching a deal by mid-July.

The digital services tax is a three per cent levy on revenue from Canadian users of digital services such as Amazon, Google, Meta, Uber and Airbnb. It takes effect on June 30 but is retroactive for three years. The initial bill facing American companies is expected to be close to $2 billion.

The United Kingdom kept a similar tax in a trade deal with the U.S. that was signed last week at the G7 summit in Alberta.

The Business Council of Canada has called on Ottawa to suspend the tax.

“Canada should put forward an immediate proposal to eliminate the DST in exchange for an elimination of tariffs from the United States,” wrote the group’s CEO Goldy Hyder, adding Trump’s decision is the “unfortunate development” the group had warned about.

In recent days, various industry associations have reached out to Ottawa urging the government to pause the tax to avoid U.S. retaliation. The Canadian Chamber of Commerce warned that the “punitive” tax could prompt the U.S. to target retirement and pension funds.

Earlier this month, 21 members of the U.S. Congress wrote to Trump saying the tax could inspire other “discriminatory cash grabs” that largely target American companies.

But on Thursday, congressional Republicans agreed to remove a so-called “revenge tax” provision from Trump’s major tax-cut bill, in response to a request from Treasury Secretary Scott Bessent.

That provision would have allowed Washington to impose taxes on companies and investments from countries charging what it called “unfair foreign taxes” on American firms.

The Canadian Press has asked the office of Finance Minister François-Philippe Champagne and all opposition parties for comment.

NDP trade critic Heather McPherson wrote that Canada should invest in employment insurance and sustainable jobs to protect workers from Trump’s whims.

“Appeasement doesn’t work. Betting on having a unique relationship with Trump doesn’t work. Negotiations in secret doesn’t work. Standing up for Canadian jobs and communities does,” she wrote.

— With files from Kyle Duggan, Anja Karadeglija and The Associated Press

This report by The Canadian Press was first published June 27, 2025.

Dylan Robertson, The Canadian Press