US stocks and the Canadian dollar are sliding after President Trump announces on TruthSocial that the US is terminating all trade discussions with his northern neighbor due to Carney putting a tax on US tech firms (like Europe):
"We have just been informed that Canada, a very difficult Country to TRADE with, including the fact that they have charged our Farmers as much as 400% Tariffs, for years, on Dairy Products, has just announced that they are putting a Digital Services Tax on our American Technology Companies, which is a direct and blatant attack on our Country.
They are obviously copying the European Union, which has done the same thing, and is currently under discussion with us, also.
Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately.
We will let Canada know the Tariff that they will be paying to do business with the United States of America within the next seven day period. Thank you for your attention to this matter!"
The reaction was swift and saw the loonie dumped...
...and US stocks rolled over...
The Canadian digital services tax, which is similar to one implemented by some other countries including the UK, is equal to 3% of the digital services revenue that a firm makes from Canadian users above C$20 million ($14.6 million) in a year.
It would apply to companies including Meta Platforms and Alphabet.
However, Canadian Finance Minister Francois-Philippe Champagne suggested to reporters last week that the digital tax may be renegotiated as part of US-Canada trade discussions.
“Obviously, all of that is something that we’re considering as part of broader discussions that you may have,” he said.
Seems a little short-sighted given the Canadian trade flow...
The Business Council of Canada has come out and said that Carney should drop the Digital Tax... we wonder why...
Well the negotiation is on now!
