BREAKING: Trump Just BROKE Canada – Stocks Hit Record High!

Summary

In this video, Graham discusses the growing tension between the U.S. and Canada over a new digital services tax. The tax, aimed at American tech giants, was proposed to address the lack of taxation on profits made by these companies off Canadian users. After several years of delay, Canada moved forward with the tax, triggering trade talks with the U.S. President Trump retaliated by threatening tariffs, using his signature negotiation tactics. Ultimately, Canada suspended the tax, but global discussions about digital services taxes are ongoing, leaving uncertainty about the future.

Takeaways

• 😀 Canada's digital services tax (DST) is a 3% tax on U.S.-based tech giants like Google, Facebook, and Amazon, aimed at ensuring Canadian profits are taxed fairly.
• 😀 The digital services tax applies to companies with over €750 million in annual revenue and at least $20 million in Canadian digital revenue.
• 😀 The tax was introduced after Canada’s failed attempt to reach a global agreement through the OECD, leading to its retroactive implementation for 2022.
• 😀 Trump responded to Canada’s DST by cancelling all trade negotiations, calling it a ‘blatant attack’ and threatening to impose tariffs on Canadian goods.
• 😀 The U.S. already has existing tariffs on Canadian goods, including 25% on most products, 50% on steel and aluminum, and 10% on energy.
• 😀 Trump's negotiation strategy involves making extreme threats and then stepping back, often leading to a de-escalation of tensions.
• 😀 Investors have adopted the ‘TACO’ strategy (Trump Always Chickens Out), capitalizing on market dips caused by trade threats before they rebound after negotiations.
• 😀 The market remains optimistic despite the threats of tariffs, as investors expect trade tensions to be resolved through negotiations, minimizing long-term damage.
• 😀 Canada’s DST is part of a broader global trend, with countries like France and the UK already implementing similar taxes, making this issue not unique to the U.S. and Canada.
• 😀 The digital services tax may still be enacted globally, though it has been delayed several times as countries continue negotiating trade deals and tax fairness.
• 😀 While tensions continue, the current consensus suggests that trade issues will eventually be resolved without major economic harm, and the stock market will continue to recover.

Q & A

What is the main reason for the controversy between Canada and the United States in the script?

The controversy stems from Canada’s decision to implement a new digital services tax (DST), targeting major American tech companies like Google, Facebook, Amazon, and Netflix. The tax aims to address the fact that these companies were profiting off Canadian users without paying sufficient taxes to Canada.

Why did President Trump cancel trade talks with Canada?

Trump canceled trade talks with Canada due to the newly introduced digital services tax. He called it a direct and blatant attack on the United States and decided to terminate all trade discussions with Canada as a response.

What is the digital services tax (DST) and how does it affect American companies?

The digital services tax is a 3% tax imposed by Canada on digital companies earning significant revenue from Canadian users. It targets large American tech firms making over €750 million annually and having at least €20 million in Canadian digital revenue. It primarily impacts American companies, with 90% of the tax revenue expected to come from them.

How did Canada initially attempt to resolve the issue of the digital services tax with the international community?

Canada initially sought to resolve the issue through the Organization for Economic Cooperation and Development (OECD), hoping to create a global tax agreement that would apply universally. However, after years of delays, Canada decided to move forward with its own DST in 2024.

What was Trump’s response after the digital services tax was implemented by Canada?

Trump immediately condemned the tax and announced that the United States would terminate all trade discussions with Canada. He also threatened to impose tariffs on Canadian goods as a result of the tax.

What is the 'Taco Strategy' referenced in the script?

The 'Taco Strategy' is a humorous term referring to a pattern in Trump’s trade negotiations, where he makes extreme threats (such as imposing tariffs), causing market dips, but eventually backs down or postpones these actions, leading to market recovery. Investors who follow this strategy profit by buying when the market dips, anticipating that Trump will not follow through with all of his threats.

How did the Canadian government react just before the digital services tax was supposed to take effect?

Just hours before the DST was set to take effect, Canada rescinded the tax in an attempt to negotiate a mutually beneficial trade arrangement with the United States. This was a significant development that impacted both Canadian and American markets.

How does Trump’s negotiation style affect the market, according to the script?

Trump’s negotiation style, characterized by aggressive threats and high-pressure tactics, creates uncertainty in the market. Initially, this leads to market drops, but when deals are reached or threats are postponed, the market recovers. Investors who understand this pattern can profit by buying during market dips.

What are some of the current tariffs between the United States and Canada mentioned in the video?

Some of the current tariffs between the U.S. and Canada include a 25% tariff on most Canadian goods, auto parts, and vehicles, a 50% tariff on steel and aluminum, and a 10% tariff on energy (which is currently paused).

How has the market responded to the ongoing tariff and trade negotiations between the U.S. and Canada?

The market has been volatile, with investors reacting to the ongoing trade negotiations. However, there is a growing consensus that the impact of tariffs will be temporary and that trade agreements will eventually be reached, leading to optimism and market recovery.