[Global Times, Ni Hao, Global Times Special Correspondents in Japan and South Korea, Pan Xiaoduo, Li Zhiyin] On the 27th local time, U.S. President Donald Trump suddenly announced the suspension of trade negotiations with Canada due to Canada’s imposition of a “Digital Services Tax” on American technology companies, which Trump described as an “outright attack.” Reuters reported that this move has once again dragged the relationship between the United States and Canada into chaos. At the G7 meeting held earlier, Trump and Canadian Prime Minister Justin Trudeau had a friendly meeting and agreed to reach a new economic agreement within 30 days. With the so-called “equal tariff” period set to expire in 90 days, tariffs with many countries have become a key item on their agendas. Representatives from Japan and South Korea have recently returned to Washington for talks on tariff issues, but according to Japanese and Korean media reports, progress in the negotiations remains limited.
According to a report by Canada’s Global Mail on the 28th, Canada’s digital services tax, which was passed last year, will start its first collection on Monday. This tax system, modeled after similar policies in European countries, imposes a 3% tax on large tech companies providing digital services in Canada, expected to affect American technology giants such as Amazon, Google, Facebook, and Uber. The Wall Street Journal stated that this tax could cost American tech companies billions of dollars. On the 26th local time, Canadian Finance Minister Bill Morneau announced that he would not delay the plan to levy a digital services tax on tech companies.
On social media platforms, Trump posted that “due to this very bad tax, we have terminated all trade consultations with Canada immediately.” He further declared, “I want Canada to know how much tariffs they need to pay for doing business with the United States within 7 days.” During a speech at the White House, Trump said negotiations would not resume unless Canada “corrects its wrongful actions.” Reuters reported that the United States is preparing similar retaliatory measures against European countries imposing a digital tax.
According to the “Global Post,” when Trump made threats, Canadian Prime Minister Justin Trudeau was consulting with the Canada-US Relations Advisory Committee. The Prime Minister’s Office hinted in a statement that negotiations would continue, but did not specify whether the digital services tax policy would be adjusted. A member of the Canada-US Relations Advisory Committee, Canadian Senator Hassan Oulsouf, told the “Global Post” that Trump’s actions on the 27th were merely a pressure tactic, and Canada should not “fall for it.” Oulsouf stated: “He just wanted to gain an advantage in negotiations, using this method to continue pressuring us. I think we don’t need to pay attention to it. We have anticipated something like this happening to some extent.”
According to NBC News, local time last Friday evening, Canada implemented retaliatory measures against the United States, setting import quotas for certain steel products and imposing a 50% additional tax on steel products exceeding the quota. The Canadian Minister of Finance said that the government’s move was aimed at protecting its domestic industries from “unfair US tariffs.”
Japanese and Korean officials visited the United States for negotiations, but the results were limited.
As an important trade partner of the United States, Japan and South Korea have also been accelerating their trade negotiations with the United States recently. According to Korea’s “Daily Economic” report on the 28th, the new government in South Korea entered a high-level phase of trade negotiations with the United States for the first time since taking office. Lee Han-gook, the Director General of the Ministry of Trade, Industry, and Energy, visited Washington on the 22nd and, during a discussion with Korean media on the 27th local time, expressed that South Korea had fully conveyed to the US its position of “starting now to prepare for accelerated negotiations.” He emphasized that this negotiation is not only about tariff issues but also represents a strategic opportunity to build a “Korea-US manufacturing industry revival partnership.”
Lee Han-gook stated that South Korea hopes to include mutual tariffs, automobile and steel tariffs on key products, as well as potential additional punitive tariffs, all within the scope of negotiations.
The US still shows reservations in certain areas, especially regarding the “package negotiation” intention proposed by South Korea, which has not yet been clearly stated.
South Korea is cautious about the outcome of this round of negotiations. Senior government officials have pointed out that the current situation remains “very severe,” and Trump may decide at the last minute whether to suspend or extend tariffs. The Korean Herald commented that the US might treat the negotiations differently based on their attitude, and if South Korea fails to show sincerity, it could be excluded from the list of countries exempted from tariff suspension. Some believe that the US might use issues such as digital taxes to pressure South Korea, leading to more friction.
In Japan, Abe Shinzo’s Economic Revitalization Minister, Taro Aso, held a Japanese-US trade talks with US Secretary of Commerce Wilbur Ross on the morning of the 27th local time in Washington. This marks Aso’s seventh visit to the US for ministerial-level trade talks, but there has been no substantial progress in reaching an agreement.
Japan prioritizes automobile tariffs as its top issue, but it is reported that the US is skeptical about lifting tariffs or significantly reducing rates, leaving the prospects of reaching an agreement unclear. The Japanese government has stated that the talks are “constructive,” but only mentioned “will continue to actively negotiate to facilitate an agreement.” On the issue of automobile tariffs, both sides have not narrowed their differences.
The planned meeting with US Treasury Secretary Steven Mnuchin scheduled for the 27th was also not realized. Japan is coordinating to schedule it after the 28th, causing Aso to postpone his return trip.
Japanese media report that so far, Japan has used increasing imports of American liquefied natural gas and agricultural products such as soybeans as bargaining chips, and has also successively added strong points like sharing shipbuilding technology and rare earth resources. However, they have failed to reach a consensus on automobile tariffs.
“The previously set timetable is becoming increasingly unattainable”
According to CNN on the 28th, with only a week and a half left until the final deadline for the so-called “equal tariffs” suspension, the White House and its trading partners have little time left to negotiate and reach an agreement. Apart from the two trade agreement frameworks currently signed, there are dozens of agreements remaining to be completed before July 9th’s deadline, meaning that the previously set timetable by the US government is becoming increasingly unattainable.
Global Post quoted Toronto trade lawyer Lawrence Herman warning that Ottawa cannot afford to give up now, as “surrendering will greatly weaken our negotiating position with the US and also harm Canada-Europe relations.”
Zhou Mou, a researcher at the China Ministry of Commerce Research Institute, told Global Times in an interview on the 29th that as the tariff suspension period comes to an end, countries around the world would not want to see the United States significantly raising tariffs on them. These countries will take corresponding measures based on their industrial or resource advantages as bargaining chips in negotiations with the US, aiming to secure a favorable situation for themselves.
On Friday local time, Trump expressed flexibility regarding the July deadline. “The Trump administration has realized that the prospects for negotiations are complex, and reaching a trade agreement is becoming more difficult, possibly extending the tariff date,” Zhou Mou believes. The current domestic economic pressures facing the US increase the likelihood of Trump delaying tariffs.