Tensions flared between President Donald Trump and Canadian Prime Minister Mark Carney after Canada imposed a 3% digital services tax on U.S. tech giants like Amazon and Google—retroactive to 2022. The move sparked fury in Washington, with Trump calling it a “blatant attack” and threatening to halt all trade talks.

Trump’s explosive Truth Social post on June 27 accused Canada of unfairly targeting U.S. firms and vowed to impose retaliatory tariffs within seven days. With over $762 billion in annual trade at stake, the threat marked a dramatic turn in U.S.-Canada relations.

Despite the pressure, Carney initially held firm, insisting Canada would negotiate in its own interest. But following intense backlash from U.S. lawmakers and Trump’s continued attacks on both Canada and the EU’s similar tax efforts, Ottawa blinked.

On Sunday night, after a high-stakes call between Trump and Carney, Canada announced it would walk back the tax “in anticipation” of a new trade agreement. The decision came just hours before the first payments were due.

While framed as a mutual move toward compromise, the timing suggests Trump’s aggressive stance forced Canada’s retreat—ending the clash, for now.