President Donald Trump on Friday said the United States is immediately "terminating ALL discussions on Trade with Canada" in response to Ottawa's decision to impose a digital services tax on American tech firms.

Trump's surprise announcement on Truth Social accused Canada of "copying the European Union" with the "egregious" tax.

"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," Trump added.

Read Trump's full post:

"We have just been informed that Canada, a very difficult Country to TRADE with, including the fact that they have charged our Farmers as much as 400% Tariffs, for years, on Dairy Products, has just announced that they are putting a Digital Services Tax on our American Technology Companies, which is a direct and blatant attack on our Country. They are obviously copying the European Union, which has done the same thing, and is currently under discussion with us, also. Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately. 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. Thank you for your attention to this matter!"

"We have such power over Canada," Trump said in the Oval Office later Friday.

"They were foolish" to go forward with the new tax, Trump said.

He said the U.S. would "stop all negotiations with Canada right now until they straighten out their act."

The office of Canadian Prime Minister Mark Carney did not immediately respond to CNBC's request for comment.

The president's angry declaration suddenly imperils America's trade relationship with a close ally that has long been one of its top two global trading partners.

U.S. goods trade with Canada totaled roughly $762 billion last year, according to the office of the U.S. trade representative.

Following Trump's announcement, the S&P 500 and the Nasdaq Composite both turned negative, retreating from the record highs they had reached earlier in the day.

The first payments from Canada's digital services tax, which was enacted last year and applies retroactively to 2022, are set to be collected Monday. The tax would hit both domestic and foreign tech companies, including U.S. giants such as Amazon, Google and Meta.

Canadian officials said this month that they would not pause the digital services tax, despite ferocious opposition from the United States.

"Obviously, we think it's patently unfair to do it retroactively," Treasury Secretary Scott Bessent said later Friday on CNBC's "Closing Bell: Overtime."

Bessent said the Trump administration was hoping that Carney's government would "put a brake on" the tax "as a sign of goodwill."

He now expects that Trump trade representative Jamieson Greer will start an unfair trade practice investigation under Section 301 of the Trade Act of 1974 "to determine the amount of harm" that the new Canadian taxes pose to the U.S.