President Donald Trump abruptly ended trade negotiations with Canada on June 28, 2025, announcing on Truth Social that Ottawa will face new U.S. tariffs within a week. The move retaliates against Canada’s 3% digital services tax affecting U.S. tech giants like Amazon and Meta, projected to generate Can$5.9 billion over five years. Trump called Canada "very difficult to trade with," throwing cold water on ongoing talks aimed at resolving steel/aluminum disputes.
The U.S. Computer & Communications Industry Association warns American firms face imminent payment obligations under Canada’s digital tax by June 30. While Washington previously sought dispute talks, Trump’s termination of all trade discussions signals escalation. Prime Minister Mark Carney confirmed Canada’s 25% counter-tariffs on U.S. metals remain adjustable pending negotiations, stating Ottawa will act "in the best interest of Canadians" despite no recent contact with Trump.
Trump’s Canada announcement followed confirmation of a rare earth trade framework with China. Beijing will "review and approve export control items," while Washington lifts "restrictive measures" – resolving a standoff over critical minerals for electric vehicles and defense tech. The deal implements May’s Geneva consensus after accusations China slow-walked rare earth licenses. This progress starkly contrasts with the collapsed Canada talks.
Dozens of economies face a July 9 deadline for Trump’s increased 10% baseline tariffs. Treasury Secretary Scott Bessent suggested deals with "10 or 12 of 18 key partners" could wrap by September, though the White House hinted extensions were possible. Markets rallied early Friday on China’s deal but dipped after Trump’s Canada remarks, reflecting uncertainty over the fragmented trade landscape.