By Natalie Andrews, Amrith Ramkumar and Vipal Monga

WASHINGTON -- President Trump on Friday said the U.S. was terminating trade talks with Canada over tariffs on dairy products and what he called an egregious digital-services tax on U.S. tech companies.

"We have just been informed that Canada, a very difficult Country to TRADE with, including the fact that they have charged our Farmers as much as 400% Tariffs, for years, on Dairy Products, has just announced that they are putting a Digital Services Tax on our American Technology Companies, which is a direct and blatant attack on our Country," Trump said on Truth Social.

"Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately."

Trump's decision is the latest blow to an already strained relationship between the bordering nations. Trump has said the U.S. should annex Canada to improve trade relations and security. Recently elected Canadian Prime Minister Mark Carney has staked his political reputation on pushing back. He has said Canada isn't for sale.

The two countries had been negotiating a new trade deal for months. Trump and Carney clashed over dairy tariffs and the digital tax last week during a bilateral meeting at the Group of Seven summit in Canada.

The first payments from tech companies to the Canadian government over the digital-service tax, a levy on revenue companies make from Canadian users, are due on Monday. The tax would likely cost U.S. tech companies billions of dollars. It includes retroactive taxes on sales going back to 2022, and industry groups estimate the initial payment could total up to $3 billion, with subsequent annual payments north of $1 billion.

Tech companies have pressured the Trump administration and lawmakers to take action for months, worrying that other countries will follow Canada's lead. Taxes on revenue made in other countries could reduce the amount of money the tech sector can invest in the U.S., industry executives say.

Google owner Alphabet, Meta Platforms and Amazon are among tech companies most affected by the tax, which applies to internet firms that meet certain revenue thresholds. One industry group, the Computer & Communications Industry Association, on Friday called for the administration to open a Section 301 investigation into Canada's trade practices.

Opposition to digital taxes was one factor that pushed tech executives to embrace Trump in his second term. Meta Chief Executive Mark Zuckerberg and Google CEO Sundar Pichai were among the cohort that attended his inauguration and whose companies put millions of dollars into the inaugural fund.

The U.S.-Mexico-Canada Trade Agreement that Trump negotiated in his first term allows Canada to impose tariffs on U.S. dairy products after a set amount has been imported tariff-free. The levies are intended to protect Canadian dairy producers and American farmers oppose them.

Although Canada hasn't been hit by Trump's reciprocal tariffs, the country must pay 50% duties on steel and aluminum, as well as tariffs on cars manufactured in Canada. The U.S. has also imposed a 25% tariffs on all goods from Canada that aren't compliant with the USMCA.

Trump's Truth Social post landed as Carney was meeting Friday afternoon with his council on Canada-U.S. relations, a group of industry, policy and labor leaders collected to advise on the trade negotiations.

Canada's finance minister, François-Philippe Champagne, earlier this month said the Canadian government had no intention of scrapping the tax, despite U.S. pressure to remove the levy.

Carney and Trump had agreed at the G-7 meeting to set a 30-day deadline to come to an agreement over the latest tariffs. Canada's ambassador to the U.S., Kirsten Hillman, told The Wall Street Journal this week that negotiators met four times last week and three times this week.

Canada wanted in the short term to address the steel and aluminum and fentanyl tariffs, and leave more difficult issues like the DST and dairy quotas for a more comprehensive round of talks later when the USMCA is expected to come up for renegotiation.

Write to Natalie Andrews at natalie.andrews@wsj.com

(END) Dow Jones Newswires

June 27, 2025 14:40 ET (18:40 GMT)

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