The first payments of Canada’s Digital Services Tax (D.S.T.) were set to be due June 30, 2025, until U.S. President Donald Trump threatened to stop trade negotiations with Canada if they followed through with taxation. Canada quickly moved to dismantle the act in fear of further economic complications with their biggest economic partner, and trade negotiations resumed soon after. In the meantime, before the immediate resumption of dialogue, Canada retaliated by upping the quota of steel imports and adding a surcharge for imports that exceed said quota, according to NBC News. Trade talks between the U.S. and Canada have been underway since April 2, a day Trump dubbed “Liberation Day,” when the U.S. started imposing high tariffs on just about every country. Following the uproar from this decision, Trump consequently walked back on the tariffs and imposed a 90-day pause which marked July 9 as the deadline by which countries needed to engage in trade negotiations if they wanted to lessen the blow of potential tariffs.

D.S.T.s are a newer, controversial type of tax meant to target tech companies without a physical market in countries that can otherwise dodge taxes. Since taking office in January 2025, Trump has targeted D.S.T.s by signing an executive order in February which designated that these acts are “designed to plunder American companies.” Trump views Canada’s D.S.T. as a “direct and blatant attack on our Country,” as Canada intended to impose a digital tax on a number of prominent companies profiting off the Canadian market, many of whom were American. Examples of companies that would have been affected by this enactment include tech giants like Uber, Meta, Amazon, and Google. This act was not dissimilar to other D.S.T.s in that it intended to regain control of the country’s market, but it was unique for its retroactivity. Canada’s D.S.T. would apply taxes to these tech conglomerates dating back to 2022, despite the act having been approved by Canada’s parliament in June 2024. The combination of retroactivity and the Trump administration’s distaste for D.S.T.s contributed to U.S. suspension of trade talks.

Trump’s response to Canada’s D.S.T. is unprecedented behavior in recent American economic policy. This “with or against me” attitude in attaining trade goals comes off as a form of economic intimidation and further exemplifies Trump’s unpredictable foreign policy. The recent tensions between Canada and the U.S. have emerged out of Trump’s “America first” ideology, which has caused rifts with some of the country’s closest allies. The way Trump sees it, America is being pushed around by other countries and has too often conceded to others’ needs instead of putting its own needs at the forefront. D.S.T.s are just one example of the behavior Trump perceives as an attack on American assets.

Canada is not the only country to have launched digital tax reforms, which have grown in popularity in recent years due to the general inability of countries to gain control of tech companies that make a profit off of in-country markets. According to the Organization for Economic Co-operation and Development (O.E.C.D.), this tactic of multinational enterprises exploiting tax loopholes to avoid paying significant taxes is addressed in the O.E.C.D./G20 Framework on Base Erosion and Profit Sharing, an international initiative that has struggled to gain Congressional approval in the U.S. Despite the rising popularity of D.S.T.s in other countries, there is an emerging possibility that after witnessing the U.S. almost cancel trade talks with one of its key allies, other economic partners will feel pressured to cancel their D.S.T.s in order to avoid any potential strains.

The strong-handed approach that Trump has championed in his foreign policy may not provide the results he hopes for in the long term, for both the American people and for American companies. While pushing countries to concede to your needs may work temporarily, as it has for China in some instances, countries may begin to avoid trade with the U.S. as they realize the negative impact its aggressive and sporadic tactics could have on their own economies. Threatening tariffs one moment and then proceeding with trade negotiations the next does not suggest a stable partner, and countries may begin to seek more reliable sources of trade elsewhere. Additionally, pushing countries to abide by every whim of bigger economies sets a bad precedent for future international trade relations and creates a hierarchy with the richest in society at the top and the average citizens of these countries at the bottom. Trump has also essentially put both American and Canadian consumers at risk of paying higher prices on products traded between the two countries for the sheer sake of saving multimillion-dollar companies from fair taxation. While Trump claims to look out for regular, working-class Americans in his America-first rhetoric, his actions on the international front may end up negatively impacting these people instead.

There remains a level of hypocrisy in Trump’s opposition to Canada’s D.S.T. that cannot be ignored. This D.S.T. would be Canada’s method of protecting its economy from companies that take up space in their market, essentially a Canada-centered approach. One could imagine that if a similar law were passed in the U.S., there is a possibility that Trump would be in favor of it due to its U.S.-centered focus and overall deterrence of outside companies controlling the market. Despite similarities between the reasoning behind Canada’s D.S.T. and Trump’s desire to bolster American-made production, he does not respect when a country other than the U.S. attempts to do something beneficial for itself. Wanting countries to support U.S. endeavors that may not ultimately benefit them but avoiding doing the same for these countries signals hypocrisy in Trump’s foreign policy.

If Trump truly wanted to support the average working American, he would not risk raising the price of goods in order to save money for large corporations. He would not be starting unreasonable trade wars with countries that have been long-term allies simply for the prospect of focusing more production in the U.S. While some products are capable of being produced in the U.S., there are many imports that are location-specific due to natural resources and labor markets. Negotiating with countries only on terms that benefit the U.S. can cause countries to either slowly shrink away from doing business with the U.S. or initiate retaliatory measures, such as those Canada initially enacted. In creating such hostile trade markets, Trump is making the average consumer pay. He should be building bridges and creating trade deals with countries rather than tearing them down. Being hostile in international trade does not make the U.S. look strong, but instead makes it the bully as it risks creating a unstable economy for both the U.S. and its economic partners alike.