[Global Times, Ni Hao, Global Times Special Correspondents in Japan and South Korea, Pan Xiaoduo, Li Zhiyin] On the 27th local time, US 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. Trump described this as an “outright attack.” Reuters reported that this move has once again dragged the relationship between the US 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 recently went to Washington for talks on tariff issues, but according to Japanese and Korean media reports, the progress of the negotiations remains limited.
According to a report by Canada’s Global Post on the 28th, Canada’s Digital Services Tax, which was passed last year, will start its first collection on Monday. This tax system, following 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 the 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 that unless Canada “corrects their mistakes,” negotiations would not resume. Reuters reported that the US is preparing similar retaliatory measures against European countries imposing the Digital Services 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 explicitly adjust the digital services tax policy. A member of the Canada-US Relations Advisory Committee and Canadian Senator Hassan Oussouffle has told the “Global Post” that Trump’s actions on the 27th were merely a pressure tactic, and Canada should not be “hooked.” Oussouffle 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, local time last Friday evening, Canada implemented retaliatory measures against the United States, setting quotas for certain steel imports and imposing a 50% additional tax on steel products exceeding these quotas. The Canadian Minister of Finance said that the government’s move was to protect 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 trading partner of the United States, Japan and South Korea have also been accelerating their trade negotiations with the United States recently. According to a report by South Korea’s “Daily Economic” on the 28th, the new government in South Korea entered a high-level phase of trade negotiations with the U.S. for the first time since taking office. Lu Hanjiu, the Director General of the Department of Trade and Industry of South Korea, visited Washington on the 22nd and, during a discussion with South Korean media on the 27th local time, expressed that South Korea had fully conveyed to the U.S. its position of “ready to accelerate negotiations starting now,” and emphasized that this negotiation is not only about tariff issues but also a strategic opportunity to build a “Canadian-American Industrial Manufacturing Revitalization Partnership.”
Lu Hanjiu stated that South Korea hopes to include mutual tariffs, automobile and steel tariffs on key products, as well as possible future 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 National Newspaper” commented that the US might treat the negotiations with a “different approach” based on their attitude, and if South Korea fails to demonstrate sincerity, it may 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 or significantly reducing tariffs, leaving the prospects of reaching an agreement unclear. The Japanese government has stated that the talks are “constructive,” but it has only reached the level of “will continue to actively negotiate to facilitate an agreement.” In the area of automobile tariffs, both sides have not been able to narrow their differences.
The planned talks with US Treasury Secretary Steven Mnuchin scheduled for the 27th were also not realized. Japan is coordinating to schedule them 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 like soybeans as bargaining chips, and has also successively added strong points such as sharing shipbuilding technology and rare earth resources. However, they have yet to reach a consensus on automobile tariffs.
“The previously set timetable is becoming increasingly unattainable”
According to a report by CNN on the 28th, with only half a week 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 for the US government is becoming increasingly unattainable.
Global Post quoted Toronto trade lawyer Lawrence Herman warning that Ottawa should not give up chips at this time: “Surrendering will greatly weaken our negotiation position against 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 certainly do not want to see the United States significantly increase 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, which makes it very likely to postpone the tariff date,” Zhou Mou believes. The current domestic economic pressures facing the US have increased the probability that Trump will delay the tariffs.