U.S. stocks closed higher on Friday following President Donald Trump’s announcement that the United States is ending all trade negotiations with Canada in response to a digital services tax imposed on American technology firms.

The Dow Jones Industrial Average jumped 432.43 points, gaining 1%, while the S&P 500 reached a new record, closing at 6,173.07.

The Nasdaq Composite also hit a fresh all-time high, finishing the day up 0.52%.

BREAKING: The S&P 500 and the Nasdaq hit new intraday highs AND closed at RECORD HIGHS.

Remember when Democrats said Trump was going to tank the economy? I do pic.twitter.com/2kQI17QNmk

— Libs of TikTok (@libsoftiktok) June 27, 2025

President Trump made the announcement in a post on Truth Social, stating that the Canadian government’s decision to implement a digital services tax on American tech companies was unacceptable and mirrored similar policies in Europe.

“They are obviously copying the European Union, which has done the same thing, and is currently under discussion with us, also,” Trump wrote.

“Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately.”

The White House has not yet released a formal statement beyond the president’s social media post, but Trump added that Canada would be notified “within the next seven day period” of the new tariffs it will face in order to do business with the United States.

“Canada is a very difficult Country to TRADE with,” Trump continued in his post.

He also noted that the Canadian government imposes tariffs as high as 400% on U.S. dairy products, a longstanding point of contention in North American trade negotiations.

HOLY CRAP! Trump just CUT OFF Canada from ANY trade negotiations!

Have fun in a recession!

“We are hereby terminating ALL discussions on Trade with Canada, effective immediately.” pic.twitter.com/hGe2vUFsa5

— Gunther Eagleman™ (@GuntherEagleman) June 27, 2025

Trump’s decision to walk away from trade talks marks a significant shift in the U.S.-Canada economic relationship, especially after the years of negotiation that led to the U.S.-Mexico-Canada Agreement (USMCA), which replaced NAFTA in 2020.

Canadian officials have not publicly responded to the announcement as of Friday evening.

The Canadian government’s digital services tax, which was passed in 2021 and went into effect in 2024, places a levy on revenue earned by foreign technology companies that generate digital advertising and data-related profits from Canadian users.

U.S. tech companies, including several based in California, have been impacted by the measure.

The termination of trade talks comes amid broader global tensions over digital taxation and tech regulation.

The United States has also raised objections to similar digital tax measures in France, the United Kingdom, and other European Union countries. Negotiations with those governments are ongoing.

Financial markets responded positively to the Trump administration’s assertive stance.

Investors appeared to welcome the clarity around trade policy, despite the geopolitical implications.

The record closes on the S&P 500 and Nasdaq reflect investor confidence, even as tensions with a key trading partner escalate.

The White House is expected to release further details on the proposed tariff structure in the coming days.

The Office of the U.S. Trade Representative has not yet issued additional guidance regarding future trade enforcement actions related to digital taxes or Canadian imports.

Analysts are watching closely for responses from both Ottawa and Washington, as further trade restrictions between the two countries could impact sectors beyond technology, including agriculture, automotive, and consumer goods.