Trump terminates trade talks with Canada over tax on digital companies
Washington: US President Donald Trump said he would immediately cease trade negotiations with Canada and decide on a tariff rate within seven days after being informed Canada would proceed with a 'digital services tax' that applies to American tech companies.
The announcement marks a resumption of hostilities between the two North American neighbours after their relationship improved under the leadership of Canada's Prime Minister Mark Carney, a former banker elected in late April who struck a chord with Trump.
It also underlines the Trump administration's deep distaste for measures it regards as discriminatory imposts on American tech giants, such as Australia's News Bargaining Code. The policy charges Google, Meta and others for their use of media content, and has been a point of contention in trade talks between Canberra and Washington.
Canada confirmed a week ago that it would proceed with its digital services tax as passed by parliament despite ongoing negotiations with the US. It is a 3 per cent levy on revenue earned from Canadian users and will apply to companies such as Amazon, Uber and Airbnb, along with the aforementioned firms.
The levy, due to start June 30, will apply retroactively to January 2022, with US companies facing a $U2 billion ($3.1 billion) bill, according to Canadian newswire The Canadian Press. It applies to companies that produce Canadian revenue above $20 million Canadian dollars a year and global revenue above 750 million Euros.
The previous US administration under Joe Biden also took issue with the planned tax.
Trump called Canada 'a very difficult country to trade with' and labelled the digital services tax 'a direct and blatant attack on our country'.
'They are obviously copying the European Union, which has done the same thing, and is currently under discussion with us,' he posted on Truth Social.
'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.'
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