The U.S. president repeatedly singled out Canada and its digital service tax in announcing his plan to increase tariffs to match the tax rates other countries charge on imports
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OTTAWA — U.S. President Donald Trump repeatedly singled out Canada in announcing his plan to increase tariffs to match the tax rates that other countries charge on imports.
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Speaking in the Oval Office on Thursday, Trump reiterated that Canada would be better off as the 51st state, repeating the false claim that his country is paying “subsidies” to its northern neighbour, and called Prime Minister Justin Trudeau “Governor Trudeau.”
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“Canada has been very bad to us on trade, but now Canada is going to have to start paying up,” he told reporters, unprompted, in response to a question about the European Union.
Trump was unveiling his “Fair and Reciprocal Plan” which seeks to “correct longstanding imbalances in international trade and ensure fairness across the board” according to a White House fact sheet. One of the elements is Canada’s digital service tax (DST).
“Though America has no such thing, and only America should be allowed to tax American firms, trading partners hand American companies a bill for something called a digital service tax,” reads the White House fact sheet, which singles out Canada and France.
Canada indeed has a DST which imposes a three per cent tax on digital service providers with revenue exceeding $20 million. Whereas the legislation has been in force, with retroactive effect to Jan. 1, 2022, the first payment is only due on June 30, 2025.
Eighteen other countries have similar tax laws, including many in the European Union, but Canada’s DST has been met with criticism from American and Canadian politicians alike because of the country’s geographic and cultural proximity to the U.S.
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This week, Doug Ford, who is running for reelection as Ontario’s premier, called on the federal government to scrap the digital service tax which he said was “terrible.”
“The DST, every Republican, every Democrat, agrees we shouldn’t have that tax,” he told the U.S. Chamber of Commerce during his trip to Washington D.C. earlier this week.
It is unclear when Trump’s reciprocal tariffs would come into force. The memorandum called for a review of the policy within 180 days, but Trump’s nominee for Commerce secretary, Howard Lutnick, said those tariffs could come into force way earlier.
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U.S. trade officials are currently investigating the trade deficits with other countries, which could serve as a basis or justification to impose tariffs, with reports due by April 1.
“But remember, if (other countries) drop their tariffs, prices for Americans are coming down. Our production is going up, and our costs are going down,” said Lutnick.
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“It’s a two-way street, that’s why it’s called reciprocal,” he added.
Trump would not say how much he expects to raise from those reciprocal tariffs, only saying that he expects it to be a “staggering amount.” His administration has not been shy to admit it is counting on the extra revenue to get the country out of trillions in debt.
Trump dismissed any criticism from CEOs on the tariffs he intends to slap on steel and aluminum on March 12, which would greatly affect trade between Canada and the U.S. Ford’s CEO has already said those tariffs will cause “chaos” in the auto industry.
Trump claims it is the opposite. In fact, he said CEOs “are in love” with the idea.
“But I think maybe more than anybody else, the steel companies and aluminum companies, they’re in love with what’s happened, and this will eventually be the car companies, chip companies. We have to have chips made in this country right now.”
“We had these great companies that did so well, and it was taken from us. And we want that business back,” he said.
Trump also railed against Canada’s defence spending — which is still far from NATO’s two per cent of GDP target but still one of the largest spenders in absolute terms — and accused Canadians of expecting the U.S. to protect them with its military.
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Trump called the situation “unfair” and claimed Canada has “really been taking advantage” of his country’s military power.
“That’s why I feel they have to become a state,” he said.
Trump also revealed that he feels Russia should be readmitted to the G7. Russia was expelled from the then-Group of Eight (G8) countries in 2014, when Stephen Harper was Canada’s prime minister, after it invaded parts of eastern Ukraine and annexed Crimea.
Trump said that too has been a source of tensions with Trudeau and “numerous other people”
“It still would be helpful to have Russia be a part of that mix.”
National Post
calevesque@postmedia.com
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