Canada Responds to U.S. Steel Imports Following Trump’s Halt of Trade Negotiations

On Friday, President Donald Trump announced the termination of trade negotiations with Canada. He pointed to Canada’s impending digital tax on technology companies, including those from the United States, as the primary reason for this decision.

According to Trump, Canada is “a very difficult country to trade with,” and he described the tax on tech firms as “a direct and blatant attack on our Country.” In his statement, Trump declared the immediate end of all trade discussions with Canada, asserting that the United States would inform Canada about the tariffs they will incur to conduct business in the U.S. within the next week.

This decision follows Canada’s finance minister’s recent announcement regarding the digital services tax, which targets tech companies generating over $15 million from Canadian users. The tax, which is retroactive to 2022, is expected to cost U.S. companies approximately $3 billion, with initial payments due starting June 30.

In retaliation, Canada imposed a quota on certain steel imports and a 50% surcharge on imports that exceed this quota, emphasizing that this action was to protect its industries from what it termed “unjust U.S. tariffs.”

The Canadian government stated it is ready to take further steps as necessary. This escalation in trade tensions interrupted a relatively stable period for the markets, with Trump’s remarks leading to a brief dip in the S&P 500 and Nasdaq indexes, which, however, managed to recover to close at all-time highs later in the day.

Prior to the announcement, Treasury Secretary Scott Bessent had expressed optimism about the potential for extending trade deal deadlines from July 9 to Labor Day, suggesting that discussions were still fluid. Canada remains a vital trade partner for the United States, second only to Mexico.

The current tariff landscape includes a 25% rate on Canadian goods that do not comply with the U.S.-Mexico-Canada Agreement, along with additional tariffs on steel, aluminum, and foreign-made vehicles.