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Photo: Ludovic Marin/Press Pool Canada said it would rescind a digital-services tax in a bid to salvage trade discussions with the U.S. after President Trump paused talks on Friday.

Canada proceeds with digital services tax despite Trump's threat to terminate trade talks, as tech companies face a 3% tax on revenue from Canadian users retroactive to 2022.

President Trump unexpectedly announced Friday that he was “terminating” trade talks with Canada due to a looming digital services tax.

President Donald Trump said on Friday that because of Canada’s digital services tax on American tech companies, the U.S. will end all trade talks with its northern neighbor.

Trump’s announcement on Truth Social accused Canada of “copying the European Union” with the “egregious” tax.

The president said he would cease negotiations and impose new tariffs because of Canada’s imminent, new digital services taxes.