The latest move comes after the countries were working towards a trade deal to be agreed upon by mid-July.
Both countries have implemented tariffs on each other’s goods after Trump initiated a trade war earlier this year and threatened to use “economic force” to annex Canada.
Trump stated that talks have been ended due to his description of the “egregious tax” on tech companies, and he will announce new tariffs on goods crossing the border within the next week.
“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.”
In brief comments to reporters, Prime Minister Mark Carney suggested that talks would continue.
“We will continue to conduct these complex negotiations in the best interest of Canadians,” he said.
Canada’s 3% digital services tax has been a contentious issue in its relationship with the US since the law was passed last year. The first payments are due on Monday.
Business groups estimate that this tax will cost American companies, such as Amazon, Apple, and Google, over $2bn annually.
Canadian officials have stated that they expected to discuss this issue as part of the trade talks with the US.
There were hopes that the relatively positive relationship between newly-elected Carney and Trump could help these negotiations.
The president’s most recent move raises concerns about a future deal, although Trump has often used social media threats to gain leverage or accelerate negotiations he views as sluggish
For example, last month, he threatened to increase tariffs on goods entering the US from the European Union, but retracted this threat a few days later.
Candace Laing, the CEO of the Canadian Chamber of Commerce, which has been critical of the digital services tax, said that “last-minute surprises should be expected” as the deadline for a deal approaches.
The US is Canada’s most important trading partner, buying over $400bn worth of goods last year under a long-standing free trade agreement.
However, Trump imposed a 25% tariff on that trade earlier this year, citing concerns about drug trafficking along the border.
New US tariffs on cars, steel, and aluminum have further strained relations. Car parts, for example, cross US, Mexican, and Canadian borders multiple times before a vehicle is fully assembled, and such import taxes threaten supply chains.
Trump later made exceptions for some goods in the face of widespread concern from businesses in both the US and Canada, which retaliated with its own tariffs on certain US products.
Shares in the US fell on Friday after Trump informed that talks would be terminated, but later rebounded, with the S&P 500 closing at a record high.
