Trump Kills Canada Trade Talks Over Tech Tax — and the World Is Watching

By M. Huitsing

President Donald Trump has cut off trade negotiations with Canada after the country began enforcing a 3% Digital Services Tax (DST) on U.S. tech giants like Google, Meta, Apple, and Amazon. In a Truth Social post, Trump announced, “Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately,” and warned of tariffs within a week.

The move marks a shift in tone. When Trump first launched his renewed trade agenda in early 2025, the justification centered on border security, supply chains, and what he called unfair trade deficits. The digital tax issue was not initially mentioned. But after Canada began collecting DST payments in late June, Trump quickly shifted focus, calling the tax a “direct and blatant attack” on U.S. companies and using it as the basis for halting trade talks.

This dispute isn’t just about Canada — it’s about who gets to tax Big Tech in a digital economy. Countries argue that American tech firms earn billions in their markets while paying little to no tax locally. The DST is their workaround: a small tax on digital revenue generated inside their borders. Trump claims his trade actions are about protecting American workers and small businesses. But as Forbes reports, “This isn’t a bold stand for American workers or small businesses—it’s a protectionist policy toward Big Tech, designed to shield Silicon Valley giants from paying their fair share abroad.” Instead of confronting why these taxes exist—because Big Tech shifts profits in tax havens to avoid local levies—the U.S. is threatening tariffs on allies who push back.

Trump’s administration views these taxes as discriminatory. But Canada — like the UK, France, Italy, and others — argues that if U.S. firms profit from their markets, they should pay local taxes.

The OECD attempted to broker a global tax framework, but the U.S. withdrew under Trump and has continued resisting international terms. Now, countries are moving forward individually and facing tariff threats in response.

Nations like the UK, Italy, and France — all with similar taxes — are watching Canada’s next move. Some may cut deals, as India recently proposed, by offering to withdraw its digital tax in exchange for a trade agreement. Others may hold firm.

By escalating the trade fight over Canada’s DST, Trump may have unintentionally spotlighted the very tactic he seeks to stop. By tying tariffs directly to tech tax policy, he has shown other countries that Big Tech taxes receive quick U.S. attention — and possibly more leverage at the negotiating table.

If talks fail, the U.S. could reimpose broader tariffs on steel, autos, and other sectors, setting the stage for a new trade conflict centered on digital revenue. And if Canada holds its line? Others may follow.