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US President Donald Trump said on Friday that he had abolished the trade talks with Canada immediately. He posted on Truth social and said that he would soon announce to install new tariffs on Canada.
Actually, Canada has imposed Digital Services Tax (DSS) on the US. Angered by this, Trump took this decision. Trump said that in the next 7 days, Canada would be told how much tariff he would have to pay to do business with America.
Canada has been levied digital services tax since Monday
Digital services tax is the tax that is charged from online service companies. Large foreign and domestic companies, who are earning money from online users in Canada, will have to pay 3% tax on income.
This tax will be applicable to online marketplace, social media, online advertising and user data selling. This tax applies to companies that have more than $ 800 billion earnings.
This will especially affect American tech companies such as meta, Google, Apple, Amazon and Microsoft. Traders estimate that this tax will lose more than two billion dollars every year. Along with this, 3,000 jobs can also go to America.
The Digital Services Tax Act of Canada passed on June 20, 2024 in the Canadian Parliament on June 20, 2024. However, this tax will be applicable from June 30. According to the rule, it will also be imposed on old bills from 2022. That is, tax money will have to be paid for the past.
Tariff War damage to both US-Canada
After Trump’s talks over the tariff, Canada’s PM Mark Carney said that he wanted to continue talking with the US in the interest of the people of Canada.
At the same time, America’s Treasury Secretary i.e. Finance Minister Scott Besant said that he was already feared to be imposed this tax. But since there was a conversation between the US and Canada about the tariff, they hoped that the Carney administration would not implement it.
Besant said that if Canada implements DST, the US is ready to put more tariffs on Canadian goods, although it has not yet stated the rate.
According to the data, Canada is the largest buyer in the US, bought US goods worth $ 349 billion (29.14 lakh crore rupees) last year and sold goods worth $ 413 billion (Rs 34.49 lakh crore) to the US.
If the US imposes high tariffs on Canada, Canada can also apply counter tariffs, which will damage the economy of both countries.
Demand to end DST in Canada Pierre Polyvere, leader of Canadian Conservative Party, wrote on social media that he is disappointed with the stay and hope that the talks will begin soon. Many Canadian businesses and organizations are also pressurizing the government not to implement tax as it may increase trade tension with the US.
The Canadian Trade Council and the Chamber of Commerce also warned that DSS could harm the relationship between the two countries. He demanded the government to immediately abolish the DST so that the US does not impose tariffs.
However, Canada has not indicated the retreat. Earlier this month, Canadian Finance Minister Francois-Filip Champagne said that this tax was passed by Parliament, hence it will be implemented.
Trump put tariffs on Canada before
Trump imposed several tariffs on Canada in his first term. At that time, threatened to impose 25% tariffs on all Canadian exports, but most Canadian goods were exempted from the tariff if they followed the USMCA (USA Mexico Canada Agreement) agreement. The USMCA agreement is a kind of free trade agreement that the Trump government brought in 2020.
Earlier, at the beginning of the year, Trump had threatened Canada that if he did not accept the terms of America, he would put economic pressure on it. After this, in April, Trump put 25% tarf on many Canadian items, in response to which Canada also imposed 25% tariff on many American goods. However, it was later postponed for some time by negotiating.