Canada has initiated a 3% digital services tax that targets technology companies with revenues over 20 million Canadian dollars, despite pressure from the US. President Trump responded by terminating trade discussions, labeling the tax a 'blatant attack.' The Canadian government has committed to implementing the tax and collecting it retroactively from 2022, while businesses fear it will lead to increased service costs. Finance Minister Champagne hinted at negotiations regarding the tax in future discussions, but the trade relationship's status remains uncertain amid escalating tensions.
Trump stated that Canada’s digital services tax is a direct attack on the US, leading to an immediate end to trade talks and upcoming tariffs.
Despite business concerns about the tax, the Canadian government is proceeding with the 3% digital services tax, scheduled to be implemented retroactively.
Finance Minister Champagne suggested the possibility of negotiating the digital tax within ongoing trade discussions, leaving ambiguity around the future of trade relations.
Analysts indicate that this trade conflict represents an escalation in Trump's tactics, predicting that Canada may have to maneuver diplomatically behind the scenes.
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