trump abruptly halts us-canada trade talks, new tariffs loom

2025-06-27 general

Washington, Friday, 27 June 2025.
president trump ended all trade discussions with canada. this action follows canada’s digital services tax targeting major us tech companies, a move trump likens to the eu’s approach. trump plans to announce new tariffs on canadian goods within seven days. the termination of talks has already negatively impacted market optimism and could disproportionally affect semiconductor companies. canada’s goods trade with the us totaled approximately $762 billion last year, making the situation a key point of concern for international trade.

market reaction and analyst perspectives

The S&P 500 and Nasdaq Composite turned negative following the announcement of terminated trade talks [2]. Despite this, on Friday, June 27, 2025, the S&P 500 closed at a record high of 6,173.07, a 0.52% increase, and the Nasdaq Composite also reached a record, gaining 0.52% to close at 20,273.46 [3]. The Dow Jones Industrial Average rose by 1% to 43,819.27 [3]. However, the initial optimism was dampened as investors digested the potential implications of renewed trade tensions [3].

digital services tax dispute

Trump’s decision stems from Canada’s imposition of a digital services tax (DST) targeting large American tech companies [1][2]. Trump stated Canada’s actions mirrored the European Union’s approach, which he also opposes [2][5]. Canada’s digital services tax, enacted the previous year, applies retroactively to 2022 [2]. The first payments from this tax are scheduled to be collected on June 30, 2025 [2]. Treasury Secretary Scott Bessent called the retroactive nature of the tax “patently unfair” [2].

potential tariff impacts

Trump indicated the U.S. would announce tariffs on Canadian goods within seven days [1][2]. Economists anticipate retaliatory measures from Canada, potentially leading to increased tariffs on both sides [1][6]. This could negatively affect businesses reliant on cross-border trade [1]. The Canadian dollar reacted immediately, falling more than 0.5% following Trump’s announcement [5]. Canada’s benchmark stock index also experienced a decline, with companies dependent on cross-border trade, such as General Motors and Canada Goose Holdings, facing setbacks [5].

sector-specific concerns

The termination of trade talks injects uncertainty into the U.S. administration’s tariff policy, particularly concerning its second-largest trading partner [1]. Semiconductor companies, heavily reliant on cross-border trade, are particularly vulnerable [1]. The Canadian steel industry has already warned of potential layoffs due to existing tariffs and has criticized the government’s response as insufficient [7]. The U.S. currently imposes a 50% tariff on imported steel and aluminum, while Canada has retaliated with a 25% tariff on U.S. steel and aluminum products [7].

broader economic context

The trade developments occur amid other economic signals. Data released on June 27, 2025, showed personal consumption expenditure decreased by 0.3% month-over-month in May [6]. The core PCE price index rose 2.7% year-over-year in May, the highest since February 2025 [3][6]. Consumer confidence in June improved to a four-month high, even with ongoing concerns about the potential impact of tariffs [3][6]. An economist from the University of Toronto noted the increase in inflation is concerning, especially given potential trade disruptions [6].

Bronnen

trade tariffs digital tax