On June 27, 2025, the United States announced the immediate termination of all trade negotiations with Canada. This decision was made in response to Canada's implementation of a 3% digital services tax (DST).
The DST, which took effect on June 28, 2024, applies retroactively to revenues generated from Canadian users since January 1, 2022. It targets major U.S. technology firms.
The tax applies to companies with global revenues exceeding €750 million and Canadian digital services revenue greater than CAD$20 million. It covers online marketplaces, advertising services, social media platforms, and the sale or licensing of user data.
President Trump criticized the tax as a "blatant attack" on U.S. companies. He pledged to announce new tariffs on Canadian goods within a week. The DST is expected to generate approximately $7.2 billion over five years.
Major U.S. technology firms, including Amazon, Google, Meta, Uber, and Airbnb, are projected to face payments totaling around $2 billion due to the retroactive nature of the tax.
Canadian Prime Minister Mark Carney affirmed Canada's commitment to advancing negotiations in the best interests of Canadians. As of June 28, 2025, both nations are engaged in discussions to address the dispute.