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Trump Suspends U.S.-Canada Trade Talks After Ottawa’s Digital Services Tax

Republicans have removed Section 899 from the president’s budget bill, setting the stage for a USTR probe that could impose $2 billion in U.S. tariffs on Canadian goods.

Treasury Secretary Scott Bessent talks to reporters about his lunch meeting with Republican senators and the schedule for getting the Republican megabill to President Donald Trump's desk by July 4, at the Capitol in Washington, Tuesday, June 24, 2025. (AP Photo/J. Scott Applewhite)
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Overview

  • President Trump’s directive suspends all trade talks with Canada, halting efforts to resolve U.S. tariffs on steel, aluminum and autos.
  • Canada’s new 3% digital services tax on tech firms takes effect June 30 and will collect up to US$2 billion in retroactive levies from U.S. companies.
  • Businesses from nations that miss Trump’s July 9 deadline for reciprocal tariff agreements face automatic hikes on U.S. imports.
  • USTR Jamieson Greer is expected to open a Section 301 investigation into Canada’s tax, authorizing proportional U.S. retaliation estimated at about US$2 billion.
  • In response to U.S. tariff threats, Ottawa has capped U.S. steel imports and slapped a 50% surcharge on shipments that exceed national quotas.