Trump Calls Off Trade Talks with Canada Amid Digital Tax Dispute

President Trump halted trade discussions with Canada over a new tax targeting U.S. technology firms. This abrupt decision marks a return to tension between the two nations. Trump's tariffs and trade actions have stirred financial markets and raised concerns over consumer spending and economic stability in the U.S.

In a surprising turn of events, U.S. President Donald Trump on Friday severed trade negotiations with Canada, citing the country's digital services tax on American tech companies as a 'blatant attack.' Trump announced intentions to establish new tariffs on Canadian imports within the week.

While U.S. stocks initially dipped following Trump's announcement, the markets quickly recovered, closing the week at record highs. The U.S. digital tax impacts firms like Amazon, Meta, and Alphabet's Google, with collections set to begin as planned on Monday. Payments will be retroactive to 2022, charging a 3% levy on revenues exceeding $20 million from Canadian users.

The disruption comes as Canada, the second-largest U.S. trading partner, expresses intent to continue negotiations in Canadian interests, despite escalations. The U.S. Treasury aims to mitigate the situation and continue its broader trade discussions with other nations, including China, EU, and India.

(With inputs from agencies.)