Cnn
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President Donald Trump said on Friday that he had ended commercial negotiations with Canada and will soon announce a new rate rate for this country, he said in a Post social post Friday.
The decision to put an end to the negotiations, which has been continuing for several months, has intervened after Canada announced a tax on digital services, said Trump, calling “a direct and flagrant attack on our country”.
“Based on this blatant tax, we end all discussions on trade with Canada, with immediate effect. We will make known the price they will pay to do business with the United States of America in the next seven days, “he said.
Trump has taken a particular problem with DSTs throughout the commercial negotiations with other countries, which generally describes them as “non -tariff trade barriers”. Canada has a new DST which should take effect on Monday which will be retroactive at 2022.
Taxes on digital services are a way for countries to tax online services, unlike physical products taxes. Countries with these taxes can receive income from large companies operating online – even if the company is not profitable. American companies, in particular large technological companies such as Meta, Apple, Google, Amazon and Microsoft, are disproportionately affected by the DST, according to a report published last year by the research service of non -partisan congress.
Prime Minister Mark Carney said on Friday that he wanted to continue negotiating with the United States.
“We will continue to carry out these complex negotiations in the best interests of Canadians. It is negotiation,” Carney told journalists.
“We knew that (the tax) was going to arrive. We hoped that they would not do it,” Treasury Secretary Scott Bessent on CNBC said on Friday.
“We think it is clearly unfair to do it retroactive. It is something of the Trudeau years, so we hoped, as a sign of good will, that the new administration of Carney would take at least one break on this subject during commercial talks. They do not seem to have,” added Bessent. If the Canadian government is advancing with the tax, Bessent said Trump was ready to impose higher prices on all Canadian goods, without specifying a rate.
Canada is the best buyer of American goods, important 349 billion dollars last year, according to data from the Ministry of Commerce. Meanwhile, Canada sent $ 413 billion in the United States last year, the third highest source of foreign goods.
Removing higher prices in Canada would likely lead to the country’s response by imposing higher prices on American goods. This would have wreak havoc on the economies of both countries.
Prime Minister Mark Carney’s office told CNN that the Canadian government was considering its response.
In an article on social networks, Pierre Poilievre, the leader of the Conservative Party of Canada, wrote that he hoped that the two countries could return to the negotiation table.
“Disappointed that trade discussions have interrupted. I hope they resume quickly,” he wrote.
Several Canadian companies and groups that CNN spoke pushed the government not to go ahead with the tax, fearing that they cannot cause degeneration of trade tensions between the United States.
“For many years, Canada’s Council for Affairs has warned that the implementation of a unilateral digital services may risk undercover Canada’s economic relations with its most important trading partner, the United States,” Goldy Hyder, president and chief executive officer of the Business Council of Canada, said on Friday in a statement in CNN. “This unfortunate development has now arrived.”
“In an effort to put commercial negotiations on the right track, Canada should present an immediate proposal to eliminate the ASD in exchange for elimination of the United States.”
The Canadian Chamber of Commerce has echoed these feelings.
“Our position on digital services tax has been consistent, but mainly for the reason that it is self -destructive in nature.
“The tone and tenor of talks have improved in recent months, and we hope to see the progress has continued. We respect that Team Canada leads these negotiations to the table, and we must give them space to navigate. ”
At the start of his second term, Trump threatened to impose a 25% rate in all Canadian exports, with even higher rates for specific products.
However, as it stands, most Canadian goods have been exempt from these 25%prices, as long as they comply with the American-Mexico-Canade agreement, he negotiated during his first mandate.
The biggest exceptions, with a few small characters, are the 25% prices on all foreign cars, automotive parts, steel and aluminum. Trump then doubled the price on all imports of steel and aluminum at 50%. The goods from Canada which were not in line with the USMCA had to face a combined rate rate of 50%.
In response to these car rates, Canada has raised a 25% rate on vehicles made in the United States which does not comply with USMCA. Canada has also retaliated against the initial 25% Trump steel and aluminum rates by deploying a 25% rate on approximately $ 43 billion in American products, including whiskey, sports equipment and household appliances.
Dozens of other countries could soon face higher prices, because a deadline of July 9 is looming for the “reciprocal” prices announced in April to resume unless Ink impacted countries are agreements with the United States. It is not clear if Trump will eventually extend this deadline more and where price rates could end. Several countries of the European Union also have DSTs, however, Bessent said on Friday: “We are in active discussions with them to shoot them down.”
The actions closed on Friday despite Trump’s last price threat. The S&P 500 and the Nasdaq, heavy technological, which had plunged into red after its post, both won 0.52% to close at record peaks. The DOW has won 432 points, or 1%.
This story has been updated with an additional context and developments.