Just when you’d started to move on from thinking so much about that fellow leading our southern neighbours, Donald Trump has returned to remind you that Canada is still in his crosshairs.
What happened: Trump announced on Friday that he was breaking off trade talks until Canada agreed to drop the Digital Services Tax (DST) levied on big tech platforms, adding further demands over the weekend that Canada negotiate supply management policies.
- “Frankly, Canada should be the 51st state. It really should, because Canada relies entirely on the United States,” Trump said in the interview that aired yesterday on Fox News.
Why it matters: Canada’s trade fight with the U.S. may have receded from front pages in recent weeks, but it’s far from over. The agreement by Prime Minister Mark Carney and Trump to reach a deal by mid-July may now be in doubt.
- The government announced last night it would rescind the DST, but compromising on supply management would come at a serious political price among dairy and poultry farmers in Quebec and Ontario.
- Supply management has powerful enough supporters that a proposal forbidding the government from even discussing changes to the program in trade talks recently became law.
Zoom out: Investors are certainly optimistic that the U.S. and Canada will cut a deal that scraps most of the tariffs — the S&P/TSX Composite Index is hovering near record highs, up almost 20% since “Liberation Day” tariffs were first announced in April.