Trump says US will terminate trade talks with Canada over tax on technology companies – live

President Trump announced the immediate termination of all trade discussions with Canada, citing Canada's new Digital Services Tax on US technology companies, and plans to impose new tariffs on Canadian goods within seven days. This move escalates trade tensions with the US's second-largest trading partner, potentially disrupting $762 billion in annual trade and directly impacting major tech firms like Amazon and Google. Concurrently, Trump abandoned plans to lift sanctions on Iran, threatening further military action, and the Supreme Court issued a ruling limiting nationwide injunctions, a significant win for the administration enabling previously blocked federal policies.

Analysis

The immediate termination of US-Canada trade discussions introduces significant uncertainty into a $762 billion annual trade relationship, the second-largest for the United States. This policy pivot, triggered by Canada's plan to implement a Digital Services Tax retroactive to 2022, directly targets major US technology firms including Amazon, Google, and Meta, with the US administration threatening to announce new tariffs on Canadian goods within a week. The move abruptly reverses recent diplomatic progress and signals a return to trade-related volatility, negatively impacting companies with highly integrated North American supply chains. This escalation occurs within a broader context of increased geopolitical risk, evidenced by the simultaneous abandonment of sanctions relief for Iran and threats of further military action, as well as a pivotal Supreme Court ruling that curtails nationwide injunctions, thereby strengthening the executive branch's ability to implement previously blocked policies.

Key Decisions for Investors

• Investors should assess exposure to US tech giants like Amazon and Google, which are directly targeted by Canada's digital tax, and to industrial sectors with integrated US-Canada supply chains that are now vulnerable to new tariffs.
• The sudden termination of trade talks and renewed tensions with Iran signal a period of heightened policy-driven volatility, warranting a review of portfolio risk and potentially increasing hedges against broad market drawdowns.
• Monitor the USD/CAD exchange rate for increased volatility and be prepared for disruptions in cross-border commerce, which could impact companies dependent on the $762 billion annual trade flow.