In a clear display of pressure, US President Donald Trump has stated that the US is immediately haltering trade negotiations with Canada in response to the country’s digital services tax.
Trump referred to the Canadian tax as a “direct and blatant attack on our country” in a post on his Truth Social platform on Friday, saying that “we are hereby terminating ALL discussions on Trade with Canada, effective immediately.” Within the next seven days, he added, “We will let Canada know the tariff that they will be paying to conduct business with the United States of America.”
The Digital Services Tax Act was approved by Canada on June 20, 2024, and it became effective on June 28. In accordance with this, Canada will levy a tax on any company that generates more than 20 million dollars ($14.6%) in calendar year from Canadian users.
Businesses have been urging a pause, fearing that it would raise the cost of providing services and wreak havoc with the US government. However, the federal government of Canada has so far rejected the plans and is still working on them. The Canadian Revenue Authority will begin collecting taxes starting on Monday, and they will continue to hold the funds until 2022.
According to Bloomberg News, Finance Minister Francois-Philippe Champagne suggested that the digital tax might be negotiated as part of more extensive, ongoing US-Canada trade discussions last week. A trade deal was anticipated in July after those discussions appeared to be going well. The situation with that is currently uncertain.
The Asia Pacific Foundation of Canada’s vice president of research and strategy, Vina Nadjibulla, said, “This is definitely an escalation from Trump.” “But this tactic has already been used.” She said Canada will need to work in the background to locate an off-ramp without clinging to his demands.
Trump’s negotiations with the European Union include digital tax, according to the statement. As it considers its response, Canada will need to work with the EU and other partners, Nadjibulla continued.
Trump’s declaration, according to Rachel Ziemba, an adjunct senior fellow at the Center for a New American Security, was “not surprising,” according to Rachel Ziemba, adding that it would also serve as a scare tactic for the EU, who the US is still negotiating its trade deal.
Source: Aljazeera
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