Trump ends trade talks with Canada over digital services tax, threatens to set tariff
Mr Carney (left) and Mr Trump recently met at the Group of Seven leaders' summit in Canada and agreed to try to hash out an agreement by the middle of July. PHOTO: REUTERS
WASHINGTON – US President Donald Trump said he was ending all trade discussions with Canada in retaliation for the country's digital services tax, and threatened to impose a fresh tariff rate within the next week.
'Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately. We will let Canada know the Tariff that they will be paying to do business with the United States of America within the next seven day period,' Mr Trump posted on June 27, on social media.
Canada and the US have one of the world's largest bilateral trading relationships, exchanging more than US$900 billion (S$1.14 trillion) of goods and services in 2024.
Canadian Prime Minister Mark Carney, speaking briefly to a television reporter, said he had not spoken with Mr Trump yet, on June 27.
'We'll continue to conduct these complex negotiations in the best interests of Canadians,' he said.
The Canadian dollar dropped more than 0.5 per cent almost immediately after Mr Trump's post before paring those losses. Canada's benchmark equity index fell, and the shares of companies that rely on moving goods across the border, including General Motors and apparel maker Canada Goose Holdings, also took a hit.
Dozens of countries face a July 9 deadline for Mr Trump's higher tariffs to kick back into place, and have been engaged in negotiations with the US.
That deadline does not apply to Canada and Mexico. The president imposed tariffs on the US' North American neighbours earlier this year over fentanyl trafficking and migration concerns, and talks with them are being handled on a separate track.
Last week, Mr Trump and Mr Carney met at the Group of Seven leaders' summit and agreed to try to hash out an agreement by the middle of July.
Canadian business groups and some politicians quickly applied pressure on Mr Carney to drop the digital tax.
'In an effort to get trade negotiations back on track, Canada should put forward an immediate proposal to eliminate the DST in exchange for an elimination of tariffs from the United States,' said Mr Goldy Hyder, chief executive officer of the Business Council of Canada.
Ontario Premier Doug Ford reiterated his call for the prime minister to abandon the digital tax.
'We've long supported the idea that global tech giants should pay their fair share in the countries where they operate. But the digital services tax hasn't achieved that,' the Council of Canadian Innovators, which represents technology executives, said in a statement.
'It's functionally a pass-through cost paid by Canadian advertisers and consumers, and it leaves our economy exposed to draconian trade retaliation.'
More on this Topic Carney says he and Trump aiming for Canada-US deal within 30 days
US Treasury Secretary Scott Bessent on June 26 announced a deal with G-7 allies that will exclude US companies from some taxes imposed by other countries in exchange for removing the Section 899 'revenge tax.' However, the deal did not address digital services taxes placed on large technology firms by some countries, which are opposed by Mr Trump and his officials.
Canada's digital services tax is not new. It was passed into law a year ago, but companies have not had to pay it yet.
Mr Carney's government is poised to proceed with implementing it, however, with the first payments due on June 30, the country's finance department said earlier on June 27.
Business groups in the country have opposed the levy, arguing it would increase the cost of services and invite retaliation by the US.
A group of 21 US lawmakers wrote to Mr Trump earlier this month asking him to push for the tax's removal, estimating it will cost American companies US$2 billion. Mr Trump in his trade push has long railed against taxes and other non-tariff barriers, casting them as an impediment to US exporters.
The Canadian digital services tax is similar to those implemented by other countries, including the UK. The levy is 3 per cent of the digital services revenue that a firm makes from Canadian users above C$20 million (S$18 million) in a year. It would apply to companies including Meta Platforms and Alphabet, and has been criticised by other technology companies such as Uber Technologies and Etsy.
However, Canadian Finance Minister Francois-Philippe Champagne suggested last week that the digital tax may be renegotiated as part of US-Canada trade discussions.
'Obviously, all of that is something that we're considering as part of broader discussions that you may have,' he said. BLOOMBERG
Join ST's Telegram channel and get the latest breaking news delivered to you.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Straits Times
36 minutes ago
- Straits Times
US Senate unveils new Trump tax draft with plans to vote soon
This is as the US moves closer to a vote on the tax cut package with a July 4 deadline set by President Donald Trump. PHOTO: REUTERS US Senate unveils new Trump tax draft with plans to vote soon WASHINGTON - Senate Republicans unveiled a new version of their US$4.2 trillion (S$5.1 trillion) tax cut package, moving closer to a vote as they near a July 4 deadline set by President Donald Trump. The new draft reflects compromises among warring factions of the Senate GOP which has been divided over how much to cut safety-net programs such as Medicaid and how rapidly to phase out of renewable energy tax credits enacted under the Biden administration. A tentative deal with House Republicans to increase the state and local tax deduction is included. The bill would raise the SALT deduction cap from US$10,000 to US$40,000 for five years before snapping back to the US$10,000 level. The new cap applies to 2025 and rises 1 per cent in subsequent years. Republicans plan to start voting on the tax bill on June 28 with final votes coming as soon as early on June 29. Party leaders plan to bring House members back to Washington early next week for what they hope will be final approval of the measure in time for Trump's Independence Day deadline. It is not yet clear if the 50 Senate Republicans needed to pass the bill are all on board. The bill can be further altered on the Senate floor to secure the votes if needed. The House could make more changes if Speaker Mike Johnson has trouble corralling votes for the measure. To win over moderate Republicans, the bill would create a new US$25 billion rural hospital fund aimed at helping some Medicaid providers avoid cuts. Republican Senator Susan Collins of Maine, however, had demanded a US$100 billion fund. Moderate Republicans also won a delay from 2031 to 2032 for when a new 3.5 per cent cap on state Medicaid provider taxes takes effect. The provider tax is a gimmick by which states boost their federal Medicaid reimbursement rates and many states have come to rely on the practice. Another change in the measure is that a tax credit for hydrogen production wouldn't be phased out until 2028 for projects that begin construction before then. Previous version ended the credit after 2025. The measure would avert a US payment default as soon as August by raising the debt ceiling by US$5 trillion. BLOOMBERG Join ST's Telegram channel and get the latest breaking news delivered to you.
Straits Times
36 minutes ago
- Straits Times
Immigrants scramble for clarity after Supreme Court birthright ruling
FILE PHOTO: The U.S. Supreme Court building is seen in Washington, U.S., May 20, 2024. REUTERS/Evelyn Hockstein/File Photo FILE PHOTO: A ball lies stuck on the fencing at the Bluebonnet Detention Facility, where Venezuelans at the center of a Supreme Court ruling on deportation are held, in Anson, Texas, U.S. April 22, 2025. REUTERS/Daniel Cole/File Photo WASHINGTON - The U.S. Supreme Court's ruling tied to birthright citizenship prompted confusion and phone calls to lawyers as people who could be affected tried to process a convoluted legal decision with major humanitarian implications. The court's conservative majority on Friday granted President Donald Trump his request to curb federal judges' power but did not decide the legality of his bid to restrict birthright citizenship. That outcome has raised more questions than answers about a right long understood to be guaranteed under the U.S. Constitution: that anyone born in the United States is considered a citizen at birth, regardless of their parents' citizenship or legal status. Lorena, a 24-year-old Colombian asylum seeker who lives in Houston and is due to give birth in September, pored over media reports on Friday morning. She was looking for details about how her baby might be affected, but said she was left confused and worried. "There are not many specifics," said Lorena, who like others interviewed by Reuters asked to be identified by her first name out of fear for her safety. "I don't understand it well." She is concerned that her baby could end up with no nationality. "I don't know if I can give her mine," she said. "I also don't know how it would work, if I can add her to my asylum case. I don't want her to be adrift with no nationality." Trump, a Republican, issued an order after taking office in January that directed U.S. agencies to refuse to recognize the citizenship of children born in the U.S. who do not have at least one parent who is an American citizen or lawful permanent resident. The order was blocked by three separate U.S. district court judges, sending the case on a path to the Supreme Court. The resulting decision said Trump's policy could go into effect in 30 days but appeared to leave open the possibility of further proceedings in the lower courts that could keep the policy blocked. On Friday afternoon, plaintiffs filed an amended lawsuit in federal court in Maryland seeking to establish a nationwide class of people whose children could be denied citizenship. If they are not blocked nationwide, the restrictions could be applied in the 28 states that did not contest them in court, creating "an extremely confusing patchwork" across the country, according to Kathleen Bush-Joseph, a policy analyst for the non-partisan Migration Policy Institute. "Would individual doctors, individual hospitals be having to try to figure out how to determine the citizenship of babies and their parents?" she said. The drive to restrict birthright citizenship is part of Trump's broader immigration crackdown, and he has framed automatic citizenship as a magnet for people to come to give birth. "Hundreds of thousands of people are pouring into our country under birthright citizenship, and it wasn't meant for that reason," he said during a White House press briefing on Friday. WORRIED CALLS Immigration advocates and lawyers in some Republican-led states said they received calls from a wide range of pregnant immigrants and their partners following the ruling. They were grappling with how to explain it to clients who could be dramatically affected, given all the unknowns of how future litigation would play out or how the executive order would be implemented state by state. Lynn Tramonte, director of the Ohio Immigrant Alliance said she got a call on Friday from an East Asian temporary visa holder with a pregnant wife. He was anxious because Ohio is not one of the plaintiff states and wanted to know how he could protect his child's rights. "He kept stressing that he was very interested in the rights included in the Constitution," she said. Advocates underscored the gravity of Trump's restrictions, which would block an estimated 150,000 children born in the U.S. annually from receiving automatic citizenship. "It really creates different classes of people in the country with different types of rights," said Juliana Macedo do Nascimento, a spokesperson for the immigrant rights organization United We Dream. "That is really chaotic." Adding uncertainty, the Supreme Court ruled that members of two plaintiff groups in the litigation - CASA, an immigrant advocacy service in Maryland, and the Asylum Seeker Advocacy Project - would still be covered by lower court blocks on the policy. Whether someone in a state where Trump's policy could go into effect could join one of the organizations to avoid the restrictions or how state or federal officials would check for membership remained unclear. Betsy, a U.S. citizen who recently graduated from high school in Virginia and a CASA member, said both of her parents came to the U.S. from El Salvador two decades ago and lacked legal status when she was born. "I feel like it targets these innocent kids who haven't even been born," she said, declining to give her last name for concerns over her family's safety. Nivida, a Honduran asylum seeker in Louisiana, is a member of the Asylum Seeker Advocacy Project and recently gave birth. She heard on Friday from a friend without legal status who is pregnant and wonders about the situation under Louisiana's Republican governor, since the state is not one of those fighting Trump's order. "She called me very worried and asked what's going to happen," she said. "If her child is born in Louisiana … is the baby going to be a citizen?" REUTERS Join ST's Telegram channel and get the latest breaking news delivered to you.
Straits Times
36 minutes ago
- Straits Times
Trump wins as Supreme Court curbs judges, but may yet lose on birthright citizenship
FILE PHOTO: U.S. President Donald Trump speaks during a meeting with Democratic Republic of the Congo's Foreign Minister Therese Kayikwamba Wagner and Rwanda's Foreign Minister Olivier Nduhungirehe in the Oval Office at the White House in Washington D.C., June 27, 2025. REUTERS/Ken Cedeno/File Photo Trump wins as Supreme Court curbs judges, but may yet lose on birthright citizenship WASHINGTON - The U.S. Supreme Court's landmark ruling blunting a potent weapon that federal judges have used to block government policies nationwide during legal challenges was in many ways a victory for President Donald Trump, except perhaps on the very policy he is seeking to enforce. An executive order that the Republican president signed on his first day back in office in January would restrict birthright citizenship - a far-reaching plan that three federal judges, questioning its constitutionality, quickly halted nationwide through so-called "universal" injunctions. But the Supreme Court's ruling on Friday, while announcing a dramatic shift in how judges have operated for years deploying such relief, left enough room for the challengers to Trump's directive to try to prevent it from taking effect while litigation over its legality plays out. "I do not expect the president's executive order on birthright citizenship will ever go into effect," said Samuel Bray, a Notre Dame Law School professor and a prominent critic of universal injunctions whose work the court's majority cited extensively in Friday's ruling. Trump's executive order directs federal agencies to refuse to recognize the citizenship of children born in the United States who do not have at least one parent who is an American citizen or lawful permanent resident, also called a "green card" holder. The three judges found that the order likely violates citizenship language in the U.S. Constitution's 14th Amendment. The directive remains blocked while lower courts reconsider the scope of their injunctions, and the Supreme Court said it cannot take effect for 30 days, a window that gives the challengers time to seek further protection from those courts. The court's six conservative justices delivered the majority ruling, granting Trump's request to narrow the injunctions issued by the judges in Maryland, Washington and Massachusetts. Its three liberal members dissented. The ruling by Justice Amy Coney Barrett, who Trump appointed to the court in 2020, emphasized the need to hem in the power of judges, warning against an "imperial" judiciary. Judges can provide "complete relief" only to the plaintiffs before them, Barrett wrote. A HOST OF POLICIES That outcome was a major victory for Trump and his allies, who have repeatedly denounced judges who have impeded his agenda. It could make it easier for the administration to implement his policies, including to accelerate deportations of migrants, restrict transgender rights, curtail diversity and inclusion efforts, and downsize the federal government - many of which have tested the limits of executive power. In the birthright citizenship dispute, the ruling left open the potential for individual plaintiffs to seek relief beyond themselves through class action lawsuits targeting a policy that would upend the long-held understanding that the Constitution confers citizenship on virtually anyone born on U.S. soil. Bray said he expects a surge of new class action cases, resulting in "class-protective" injunctions. "Given that the birthright-citizenship executive order is unconstitutional, I expect courts will grant those preliminary injunctions, and they will be affirmed on appeal," Bray said. Some of the challengers have already taken that path. Plaintiffs in the Maryland case, including expectant mothers and immigrant advocacy groups, asked the presiding judge who had issued a universal injunction to treat the case as a class action to protect all children who would be ineligible for birthright citizenship if the executive order takes effect. "I think in terms of the scope of the relief that we'll ultimately get, there is no difference," said William Powell, one of the lawyers for the Maryland plaintiffs. "We're going to be able to get protection through the class action for everyone in the country whose baby could potentially be covered by the executive order, assuming we succeed." The ruling also sidestepped a key question over whether states that bring lawsuits might need an injunction that applies beyond their borders to address their alleged harms, directing lower courts to answer it first. STATES CHALLENGE DIRECTIVE The challenge to Trump's directive also included 22 states, most of them Democratic-governed, who argued that the financial and administrative burdens they would face required a nationwide block on Trump's order. George Mason University constitutional law expert Ilya Somin said the practical consequences of the ruling will depend on various issues not decided so far by the Supreme Court. "As the majority recognizes, states may be entitled to much broader relief than individuals or private groups," Somin said. New Jersey Attorney General Matthew Platkin, a Democrat who helped lead the case brought in Massachusetts, disagreed with the ruling but sketched out a path forward on Friday. The ruling, Platkin said in a statement, "recognized that nationwide orders can be appropriate to protect the plaintiffs themselves from harm - which is true, and has always been true, in our case." Platkin committed to "keep challenging President Trump's flagrantly unlawful order, which strips American babies of citizenship for the first time since the Civil War" of 1861-1865. Legal experts said they expect a lot of legal maneuvering in lower courts in the weeks ahead, and the challengers still face an uphill battle. Compared to injunctions in individual cases, class actions are often harder to successfully mount. States, too, still do not know whether they have the requisite legal entitlement to sue. Trump's administration said they do not, but the court left that debate unresolved. Meanwhile, the 30-day clock is ticking. If the challengers are unsuccessful going forward, Trump's order could apply in some parts of the country, but not others. "The ruling is set to go into effect 30 days from now and leaves families in states across the country in deep uncertainty about whether their children will be born as U.S. citizens," said Elora Mukherjee, director of Columbia Law School's immigrants' rights clinic. REUTERS Join ST's Telegram channel and get the latest breaking news delivered to you.
