Trump Halts Canada Trade Talks, Deepening Tariff Uncertainty for Businesses

President Donald Trump has abruptly terminated trade discussions with Canada, citing disagreements over Canada’s digital services tax. This sudden breakdown, announced via social media on Friday, plunges Canadian businesses further into uncertainty, exacerbating an already volatile tariff dispute.

The move comes as Canada’s economy shows significant strain, growing only 0.8% in the first quarter of 2025 and contracting by 0.1% in April. This slowdown is largely attributed to the ongoing trade war and its unpredictable nature. Businesses like Taurus Craco, an importer of machinery, have already faced punitive measures, including a C$35,000 charge due to a missed tariff deadline, despite subsequent policy reversals.

Prime Minister Mark Carney, who had taken a more conciliatory approach to Washington after his April election win, called Trump’s tariffs ‘unjust’ and has threatened further retaliatory tariffs if a resolution isn’t reached. A critical 16 July deadline for a new trade and security deal now appears jeopardized by Trump’s latest declaration.

Canadian firms, particularly those heavily reliant on US trade, are desperate for stability. Gaphel Kongtsa of the Canadian Chamber of Commerce notes the ‘fluid landscape’ where rules change without clear indication. While the manufacturing sector has been in the spotlight, the service sector, accounting for a vast majority of Canada’s workforce, also faces declining confidence and has received little government relief, as highlighted by consultant Sam Gupta.

Business owners like Wes Love of Taurus Craco echo a common sentiment: ‘Give us a set of rules and leave them alone and let us operate within those rules.’ The abrupt termination of talks signals continued turbulence, leaving Canadian businesses to navigate an unpredictable economic future.

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