President Donald Trump announced on Friday that he is halting all trade negotiations with Canada, citing what he described as a hostile tax targeting U.S.-based tech firms. In a Truth Social post, Trump criticized Canada’s upcoming digital services tax, calling it “a direct and blatant attack on our Country” and labeling Canada as “a very difficult country to trade with.”

“Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately,” Trump wrote. He added that Canada would be informed of new tariffs “within the next seven day period.”

The move escalates tensions with the United States’ second-largest trading partner. Existing tariffs include a 25% rate on non-USMCA Canadian imports, with energy products taxed at 10%. Canada is also significantly impacted by Trump’s 50% tariffs on steel and aluminum—materials it supplies to the U.S. more than any other country.

The office of Canadian Prime Minister Mark Carney has not yet issued a response to the announcement. Meanwhile, Canada’s finance minister reiterated last week that the country would proceed with the digital services tax despite ongoing trade talks. The measure applies a 3% tax on revenue generated from Canadian users by firms earning over $15 million in such income.

The tax, which is retroactive to 2022, is expected to cost American companies as much as $3 billion, according to a lobbying group representing major tech firms. Payments are due starting June 30.