The Big Story 

President Trump said Friday he was suspending trade talks with Canada and would soon announce a higher tariff rate on the U.S.’s northern neighbor.

© Getty Images

In a post on social media, Trump said he was cutting off negotiations with Canada after its government confirmed it would keep in place a digital services tax despite a recent G7 agreement on such levies.

“Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately. 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. Thank you for your attention to this matter!,” Trump wrote on Truth Social.

Digital services taxes are taxes on tech companies from countries where their products are used. Canada is requiring the first payment of its tech tax on Monday, which will charge 3 percent of revenues above $14.57 million, or 20 million Canadian dollars.

Canada’s big tech tax has been in the works for a while. Some commentators on Friday thought Trump’s social media announcement indicated a lack of planning on the part of the administration, which delivered country-specific tariffs in early April.

“This is a sign the work process on trade from the 2024-2025 presidential transition to April 2nd was horrifically flawed in even more ways than we thought,” Alan Cole of the Tax Foundation wrote on Friday.

The Hill’s Sylvan Lane and Tobias Burns has more here.

Welcome to The Hill’s Business & Economy newsletter, I’m Aris Folley — covering the intersection of Wall Street and Pennsylvania Avenue.

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Tax Watch 

Mike Johnson, Scott Bessent say SALT deal is ‘very, very close’

Speaker Mike Johnson (R-La.) and Treasury Department Secretary Scott Bessent said negotiations over the state and local tax (SALT) deduction cap are “very, very close” to a conclusion, a positive sign for Republicans as they race to put the finishing touches on their sprawling tax cuts and spending package.

Johnson and Bessent met with GOP senators during their lunch Friday to pitch them on the framework they agreed to with a handful of moderate House Republicans from high-tax blue states. Sen. Kevin Cramer (R-N.D.), who was at the gathering, said the proposal would make the SALT deduction cap $40,000 for five years, then $10,000 for the following five years.

Emerging from the huddle, both Johnson and Bessent said talks were nearing the end.

“I believe they will,” Johnson said when asked if Senate Republicans would accept the SALT plan. “They’re going to digest the final calculations, but I think we’re very, very close to closing that issue out.”

— Mychael Schnell and Al Weaver

Tax Watch is a regular feature focused on the fight over tax reform and extending the 2017 Trump tax cuts this year. Email a tip

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