NEWS ALERT: TACO Halts Canada Trade Talks, Threatens Broad Tariff 🚧
THUNDER BAY – News – U.S. President Donald Trump announced the immediate end to all trade discussions with Canada in a Truth Social post Friday afternoon. This abrupt decision, targeting Canada’s newly imposed 3% digital services tax (DST), will escalate tensions with blanket tariffs on all Canadian goods, expected to be detailed within seven days.
The Friday move is similar to other Friday threats from “TACO” or Trump always Chickens Out” – Where the U.S. President launches a tariff tantrum on Fridays, and by early the next week declares victory.
This latest move comes following the G-7 and NATO meetings. Many commentators saw Trump as being effectively “handled” by Prime Minister Carney.
Canada’s DST, effective next week, applies to companies with substantial digital revenues—foreign or domestic—earning over €750 M globally and $20 M in Canada .
Trump’s Statement
Trump accused Canada of being a difficult trading partner—citing its protected dairy sector—and labeled the DST “a direct and blatant attack on our country.” He declared the termination of all trade talks and hinted that specific tariffs would be announced soon.
Canada’s Digital Services Tax
Known as the DST, Canada’s new tax levies 3% on digital service revenue and is projected to raise over $7 billion by 2027. The U.S. has previously decried the DST as discriminatory and initiated dispute settlement consultations under USMCA.
Potential Impact & Response
This escalation could spark a new North American trade conflict—mirroring tensions from early 2025 when a separate round of U.S. tariffs led Canada to target U.S. steel and aluminum with retaliatory tariffs. The latest tariff threat risks disrupting a fragile callback in trade relations, raising concerns about:
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Increased costs for all Canadian exports to the U.S.
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U.S. tech companies facing higher costs due to the DST, potentially passing them to consumers.
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Growing political backlash within Canada, fuelling tensions over U.S. protectionism.
What’s Next?
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The U.S. is expected to set tariff levels for Canadian imports within seven days.
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Canadian officials are preparing responses—potentially including retaliatory measures or a renewed USMCA dispute.
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The move ramps up pressure on Prime Minister Mark Carney’s government, which aimed to finalize a trade deal by late July before being interrupted by this unilateral U.S. action.
Global Context
In May, G7 finance leaders downplayed trade tensions but acknowledged concerns over DSTs and tariffs. Meanwhile, Trump’s broader tariff stance targets countries with digital taxes like Canada and France.
What It Means for Canadians
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Consumers may see higher prices on everything from lumber to maple syrup and tech services.
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Businesses—especially in digital services and agriculture—face uncertainty amid escalating trade friction.
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Policymakers now face a critical choice: stand firm on digital fairness or negotiate to prevent economic fallout.
