Post by : Meena Ariff

Photo: Reuters

President Donald Trump announced on Friday that he is stopping trade talks with Canada. This decision came after Canada decided to continue with its plan to put a tax on technology companies. Trump called this tax “a direct and blatant attack on our country.”

Trump shared on his social media that Canada told the U.S. it would go ahead with its digital services tax. This tax will start on Monday and will apply to Canadian and foreign companies that have online users in Canada.

Trump wrote, “Because of this unfair tax, we are ending all trade discussions with Canada immediately. We will tell Canada what tariff they will pay to do business with the United States within the next seven days.”

Since Trump began his second term as president in January, trade relations with Canada have been rocky. He often teased Canada and once even joked that it might become a state of the U.S.

Canadian Prime Minister Mark Carney said on Friday that Canada would continue with these difficult talks to protect the interests of its people. He said, “It’s a negotiation.”

Trump later said he thinks Canada will remove the tax. He added, “Economically, we have so much power over Canada. We’d rather not use it, but it won’t work out well for them. They were foolish to do this.”

When asked if Canada could do anything to restart the talks, Trump suggested that Canada could remove the tax. He said he thinks they will but added, “It doesn’t matter to me.”

Prime Minister Carney had visited Trump in May at the White House. During that visit, Carney was polite but firm. Last week, Trump went to Canada for the G7 summit in Alberta, where both leaders set a 30-day deadline for trade talks.

The digital services tax will affect companies like Amazon, Google, Meta, Uber, and Airbnb. It will charge them 3% on revenue from Canadian users and will apply to past earnings as well, leaving U.S. companies with a $2 billion bill at the end of the month.

Matt Schruers, the chief of the Computer & Communications Industry Association, thanked Trump for his strong action against Canada’s tax, calling it unfair to U.S. digital businesses.

Canada and the U.S. have also been discussing reducing high tariffs that Trump put on Canadian goods. Trump has already put 50% tariffs on steel and aluminum and 25% on cars. He also charges a 10% tax on most imports, which might increase after July 9, when the current negotiating period ends.
Canada and Mexico face other tariffs of up to 25%, which Trump introduced to stop fentanyl smuggling. However, some products are protected under the trade deal signed during Trump’s first term in 2020.

After meeting with Republican senators on Friday, Treasury Secretary Scott Bessent did not comment on Trump’s decision to end trade talks with Canada. He only said, “I was in the meeting,” before moving on to other questions.

Canada supplies about 60% of U.S. crude oil imports and 85% of its electricity imports. It is also America’s largest foreign supplier of steel, aluminum, uranium, and many other minerals needed for defence.

About 80% of Canada’s exports go to the United States.

Daniel Beland, a political science professor at McGill University in Montreal, said this tax is a Canadian issue but has caused problems with the U.S. because it mainly targets big American tech companies.

He explained, “The Digital Services Tax Act became law a year ago, so everyone knew this tax was coming. But President Trump waited until just before it started to create drama about it during these already difficult trade talks.”On June 27, Prime Minister Paetongtarn Shinawatra had an important phone call with French President Emmanuel Macron. This was their first official talk since she became Thailand’s prime minister.

Both leaders felt happy to speak with each other and discussed many important topics. Prime Minister Paetongtarn discussed the role of ASEAN in maintaining regional security. She said ASEAN plays a big part in stopping crimes that cross borders. She explained that Thailand is working hard to stop these crimes, especially scam centers and cyber crimes that hurt people.

She also said Thailand is ready to work closely with its neighbors and other countries around the world, including France, to fight these problems together. President Macron supported her plans and efforts.

Another important topic they talked about was the border situation between Thailand and Cambodia. Prime Minister Paetongtarn said Thailand wants to solve any problems peacefully, with honesty and goodwill. She said Thailand believes in strong friendship with its neighbors, unity within ASEAN, and following international law.

She shared that having direct talks between Thailand and Cambodia is the best way to find solutions that help both sides. She also said Thailand fully supports the work of the Thailand-Cambodia Joint Border Committee, which recently had a meeting in Phnom Penh to discuss border matters.

Prime Minister Paetongtarn hopes that France, as a close international partner, will help create a good environment for talks between Thailand and Cambodia.

President Macron appreciated Thailand’s good intentions and said he would think about ways to increase cooperation with Cambodia to keep peace and friendship strong in the region.