U.S. President Donald Trump announced Friday that he is immediately ending trade negotiations with Canada in response to Ottawa’s plan to begin enforcing a controversial digital services tax targeting large tech firms. The abrupt move escalates tensions between the two countries as they had been aiming to finalize a new trade agreement by mid-July.

Posting on social media, Trump called the Canadian policy an “egregious tax” and vowed to impose new tariffs on Canadian goods within the next week.

“We are hereby terminating ALL discussions on Trade with Canada, effective immediately,” Trump wrote. “We will let Canada know the Tariff that they will be paying to do business with the United States of America within the next seven day period.”

The Canadian tax—a 3% levy on revenues generated by major digital platforms operating in the country—has long been a source of friction. First introduced last year, it is set to take effect on Monday and is expected to cost American tech giants like Amazon, Apple, and Google more than $2 billion annually.

Both nations have already exchanged tariffs in a simmering trade dispute that began earlier this year, with Trump even threatening to use “economic force” to pressure Ottawa.

Despite Trump’s announcement, Canadian Prime Minister Mark Carney appeared to downplay the rupture. In brief remarks to reporters, he said, “We will continue to conduct these complex negotiations in the best interest of Canadians.”

Canadian officials had hoped to resolve the digital tax issue within the broader trade discussions, with some optimism that Carney’s relatively cordial relationship with Trump might smooth the path forward. That prospect now appears uncertain as tensions rise again between the longstanding allies.