President unexpectedly ramps up trade war, says tariff to be announced within seven days
President Trump said on Friday he was ending negotiations with Canada over a trade deal, inflaming the tariff dispute weeks ahead of a self-imposed deadline for an agreement.
The president revealed in a Truth Social post that the US was “hereby terminating all discussions on trade with Canada, effective immediately” in response to a digital services tax on American technology companies, which he described as a “direct and blatant” attack on the US.
Trump signaled he would announce a tariff on Canadian companies exporting to the US within the next seven days, although it’s unclear whether he intends to introduce new levies on top of the current charges on general imports and energy, steel, and aluminum.
The announcement arrived hours after government statistics showed US inflation remains in check throughout the current tariff turmoil. Still, observers including Federal Reserve chair Jerome Powell have underlined the risk of an inflationary spike in the months ahead if the trade measures against Canada and other global trading partners remain in place.
The Canadian government is set to begin collecting the first payments of the digital services tax, equivalent to 3% of the digital services revenue that a firm makes from Canadian users above $20 million each year, on Monday. Other countries including the UK have implemented a similar measure.
Trump and Canadian prime minister Mark Carney indicated earlier this month that they intended to reach a deal by July 21, strengthening hopes that the trade war launched by the US president shortly after taking office in January could be nearing an end.
That tariff wave raised fears that the Canadian economy could be on course for a sharp correction, with economists highlighting the prospect of mass layoffs as a result of US charges on Canadian imports.
The Canadian government had not responded to Trump's announcement at time of writing.
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