Services Industries

A major outage at Amazon Web Services (AWS) on Monday disrupted a large portion of the internet, taking down apps, websites and online tools used by millions of people around the world, before services were eventually restored.

From banking apps and airlines to smart home devices and gaming platforms, the hours-long breakdown revealed how much of modern life depends on cloud’s infrastructure.

Here is what we know:

What happened and what caused the AWS outage?

At about 07:11 GMT, Amazon’s cloud service experienced a major outage, meaning some of its systems stopped working, which disrupted many popular apps and websites, including banks, gaming platforms and entertainment services.

The problem started in one of AWS’s main data centres in Virginia, its oldest and biggest site, after a technical update to the API – a connection between different computer programmes – of DynamoDB, a key cloud database service that stores user information and other important data for many online platforms.

The root cause appears to have been an error in the update that affected the Domain Name System (DNS), which helps apps find the correct server addresses. A DNS works like the internet’s phone book, turning website names into the numeric IP addresses that computers use to connect to servers.

Because of the DNS issue, apps could not find the IP address for DynamoDB’s API and were unable to connect.

As DynamoDB went down, other AWS services also began to fail. In total, 113 services were affected by the outage. By 10:11 GMT, Amazon said that all AWS returned to normal operations, but there was a backlog “of messages that they will finish processing over the next few hours”.

At the time of publication, Downdetector, a website that tracks internet outages based on user reports, was still showing problems with platforms such as OpenAI, ESPN and Apple Music.

Updated look at the total impact of the AWS Outage up to this point!https://t.co/Bgpm1fFGtf pic.twitter.com/TAAxjagNl6

— Downdetector (@downdetector) October 20, 2025

What is a cloud and what exactly is AWS?

A cloud is a way of storing and using data or programmes over the internet instead of on your computer or other physical storage devices.

When people say something is “in the cloud”, it means the files, apps or systems are running on powerful computers (called servers) in data centres owned by companies like Amazon (AWS), Google or Microsoft, not on your personal device.

In this case, AWS allows companies to rent computing power and storage. It supplies the technology that runs websites, apps and many online services behind the scenes.

One of AWS’s core services is DynamoDB, a database that stores important information for companies, such as customer records. On Monday, Amazon reported that customers were unable to access their DynamoDB data.

AWS is the biggest cloud service provider in the world.

Cloud outages are not rare, but they have become more noticeable as more companies rely on these services every day.

“The fallout impacted people across a number of different spheres,” Joshua Mahony, the chief market analyst at Scope Markets, told Al Jazeera. [But] of course this kind of comes with the territory with tech companies; the key is they can resolve it quickly, and it doesn’t cost them a lot of money.”

He said Amazon would likely weather the storm from the incident.

“You’re looking at something that is relatively contained,” he said. “Amazon Web Services has cornered 30 percent of the market alone. Their users are not going to suddenly jump ship. Their businesses are deeply ingrained.”

Which services and apps went down?

The outage affected dozens of websites, including Snapchat, Pinterest and Apple TV, according to Downdetector.

Other communication apps were also affected including: WhatsApp, Signal, Zoom and Slack; gaming services such as Roblox, Fortnite and Xbox; and places like Starbucks. Etsy also experienced issues.

In the United States, people were having issues with financial apps too, including Venmo.

Some users said their Ring doorbells and Alexa speakers stopped working, while others could not access the Amazon website or download books on their Kindles.

The language app Duolingo and creative tool Canva were among those reporting errors on their websites, and several media organisations were hit, including the Associated Press news agency, The New York Times and The Wall Street Journal.

Banks, the cryptocurrency exchange Coinbase, and AI firm Perplexity also reported issues, along with US airlines Delta and United.

Why did so many major apps go offline at once?

When AWS had its outage, it was not just Amazon’s tools that were affected. Thousands of other companies that use AWS for storage, databases or web hosting were also hit. These companies include many major apps that rely on AWS to run key parts of their systems.

“Whenever we see these headlines, the first thought that goes through everybody’s mind, that sends a shiver up the spine, is, ‘Is this one of those cyberattacks? Is this a military or intelligence-led thing that has led to this disruption?’ And in this case, it’s not,” Bryson Bort chief executive of the cybersecurity company Scythe told Al Jazeera.

“In fact, most of the time, it isn’t. It’s usually human error.”

How did Amazon respond?

AWS acknowledged the outage and said engineers were “immediately engaged” to fix the problem.

AWS said it worked on “multiple parallel paths to accelerate recovery”. It also reported that the main issue had been fully resolved, though some users continued to face minor delays as systems recovered.

The company also said it would publish a detailed post-event summary explaining what happened.

The White House has launched an aggressive public relations campaign promoting a narrative of economic strength during the first six months of United States President Donald Trump, with claims of his policies fueling “America’s golden age”.

But an Al Jazeera analysis of economic data shows the reality is more mixed.

Trump’s claims of his policies boosting the US economy suffered a blow on Friday when the latest jobs report revealed that the country had added a mere 73,000 jobs last month, well below the 115,000 forecasters had expected. The only additions were in the healthcare sector, which added 55,000 jobs, and the social services sector added 18,000.

US employers also cut 62,075 jobs in July — up 29 percent from cuts in the month before, and 140 percent higher than this time last year, according to the firm Challenger, Gray and Christmas, which tracks monthly job cuts. Government, tech, and retail sectors are the industries that saw the biggest declines so far this year.

It comes as this month’s jobs and labour turnover report showed an economic slowdown. There were 7.4 million open jobs in the US, down from 7.7 million a month before.

The Department of Labour on Friday released downward revisions to both the May and June jobs reports, significantly changing the picture the White House had previously painted.

“For the FOURTH month in a row, jobs numbers have beat market expectations with nearly 150,000 good jobs created in June,” the White House said in a July 3 release following the initial June report.

The Labor Department had reported an addition of 147,000 jobs in June. On Friday, it sharply revised down that number to just 14,000. May’s report also saw a big downgrade from 144,000 to only 19,000 jobs gained. Trump has since fired the head of the agency that produces the monthly jobs data, alleging that the data had been manipulated to make him look bad.

Even before the revisions, June’s report was the first to reflect early signs of economic strain tied to the administration’s tariff threats, as it revealed that job growth was concentrated in areas such as state and local government and healthcare. Sectors more exposed to trade policy – including construction, wholesale trade, and manufacturing – were flat. Meanwhile, leisure and hospitality showed weak growth, even in peak summer, reflecting falling travel demand both at home and abroad.

The administration also claimed that native-born workers accounted for all job gains since January. That assertion is misleading as it implies that no naturalised citizens or legally present foreign workers gained employment.

However, it is true that employment among foreign-born workers has declined – by over half a million jobs – claims that native-born workers are replacing foreign-born labour, are not supported by the jobs data.

Jobs lost in sectors with high foreign-born employment, including tech, have been abundant, driven by tariffs and automation, particularly AI. In fact, recent layoffs in tech have been explicitly attributed to AI advancements, not labour displacement by other groups.

Companies including Recruit Holdings — the parent company of Indeed and Glassdoor, Axel Springer, IBM, Duolingo and others have already made headcount reductions directly attributed to AI advancements.

Wage growth

The pace of rise of wage growth, an indicator of economic success, has slowed in recent months. That is partly due to the Federal Reserve keeping interest rates steady in hopes of keeping inflation stable.

According to the Bureau of Labor Statistics, wages have been outpacing inflation since 2023, after a period of declining real wages following the COVID pandemic.

Wage growth ticked up by 0.3 percent in July from a month prior. Compared with this time last year, wage growth is 3.9 percent, according to Friday’s Labor Department jobs report.

Earlier this year, the White House painted a picture that wage growth differed between the era of former President Joe Biden and now under Trump because of policy.

“Blue-collar workers have seen real wages grow almost two percent in the first five months of President Trump’s second term — a stark contrast from the negative wage growth seen during the first five months of the Biden Administration,” the White House said in a release.

However, Biden and Trump inherited two very different economies when they took office. Biden has to deal with a massive global economic downturn driven by the onset of the COVID-19 pandemic.

Trump, on the other hand, during his second term, inherited “unquestionably the strongest economy” in more than two decades, per the Economic Policy Institute, particularly because of the US economy’s rebound compared with peer nations.

Inflation

Inflation peaked in mid-2022 during Biden’s term at 9 percent, before falling steadily because of the Federal Reserve’s efforts to manage a soft landing.

A July 21 White House statement claimed, “Since President Trump took office, core inflation has tracked at just 2.1 percent.” On Wednesday, Treasury Secretary Scott Bessett said “inflation is cooling” in a post on X.

However, the Consumer Price Index report, which tracks core inflation – a measure that excludes the price of volatile items such as food and energy – was 2.9 percent in the most recent report and overall inflation was at 2.7 percent in June.

Prices

The most recent Consumer Price Index report, published July 15, shows that on a monthly basis, prices on all goods went up in June by 0.3 ,percent which is 2.7 percent higher from this time last year.

Grocery prices in particular are up 2.4 percent from this time last year and 0.3 percent from the prior month. The cost of fruits and vegetables went up 0.9 percent, the price of coffee increased by 2.2 percent and the cost of beef went up 2 percent.

New pending tariffs on Brazil, as Al Jazeera previously reported, could further drive up the cost of beef in the months to come.

Trump has pointed to falling egg prices in particular as evidence of economic success, after Democrats attacked his administration over their price in March. He has even gone so far as to claim that prices are down by 400 percent. That figure is mathematically impossible – a 100 percent decrease would mean eggs are free.

During the first few months of Trump’s term egg prices surged, and then dropped due to an outbreak of, and then recovery from, a severe avian flue outbreak, which had been hindering supply – not because of any specific policy intervention.

In January, when Trump took office egg prices were $4.95 per dozen as supply was constrained by the virus. By March, the average egg price was $6.23.  But outbreak and high prices drove away consumers, allowing farmers with healthier flocks to catch up on the supply side. As a result, prices fell to an average of $3.38. That would be a 32 percent drop since the beginning of his term and a 46 percent drop from their peak price – far from the 400 percent Trump claimed.

Trump also recently said petrol prices are at $1.98 per gallon ($0.52 per litre) in some states. He doubled down on that again on Wednesday. That is untrue. There is not a single state that has those petrol prices.

According to Gasbuddy, a platform that helps consumers find the lowest prices on petrol, Mississippi at $2.70 a gallon ($0.71 per litre) has the cheapest gas, and the cheapest petrol station in that state is currently selling gas at $2.37 ($0.62 per litre).

AAA, which tracks the average petrol price, has it at $3.15 per gallon ($0.83 per litre) nationwide, this is up from the end of January when it was $3.11 ($0.82 per litre).

While petrol prices have gone down since Trump took office, they are nowhere close to the rate he has continually suggested. In July 2024, for instance, the average price for a gallon of petrol nationwide was $3.50 ($0.93 per litre).

GDP

On Wednesday, the White House said that “President Trump has reduced America’s reliance on foreign products, boosted investment in the US”, citing the positive GDP data that had come out that morning.

That is misleading. While the US economy grew at a 3 percent annualised rate in the second quarter, surpassing expectations, that was a combination of a rebound after a weak first quarter, a drop in imports – which boosted GDP, and a modest rise in consumer spending.

The data beneath the headline showed that private sector investment fell sharply by 15.6 percent and inventories of goods and services declined by 3.2 percent, indicating a slowdown.

Manufacturing

The administration recently highlighted gains in industrial production, pointing to a boost in domestic manufacturing. Overall, there was a 0.3 percent increase in US industrial production in June. That was after stagnating for two months.

There have been isolated gains, such as increases in aerospace and petroleum-related sectors—1.6 percent and 2.9 percent, respectively.

But production of durable goods — items that are not necessarily for immediate consumption— remained flat, and auto manufacturing fell by 2.6 percent last month as tariffs dampened demand. Mining output also decreased by 0.3 percent.

According to the Department of Commerce’s gross domestic product report, manufacturing growth among non-durable goods has slowed. While there was a 1.3 percent increase, that’s a decline from 2.3 percent in the previous quarter.

This could change in the future, as several companies across a range of sectors have pledged to increase US production, including carmaker Hyundai and pharmaceutical giant AstraZeneca, which just pledged a $50bn investment over the next five years.

Trade deals and tariffs

In April, the White House replaced country-specific tariffs with a 10-percent blanket tariff while maintaining additional levies on steel, cars, and some other items. It then promised to deliver “90 trade deals in 90 days.” That benchmark was not met. By the deadline, only one loosely fleshed out deal — with the United Kingdom — had been announced. As of 113 days later, the US has announced comparable deals with just a handful more countries and the European Union. The EU deal still needs parliamentary approval.

Contrary to the administration’s claims, tariffs do not pressure foreign exporters — they are paid by US importers and ultimately are likely to be passed on to US consumers. Companies, including big box retailer Walmart and toymaker Mattel, have announced price hikes as a direct result. Ford, for example, raised prices on three Mexico-assembled models due to tariff pressures.

To protect their own economies, many countries have pivoted their trade policies away from the US. Brazil and Mexico recently announced a new trade pact.

The White House and its allies continue to defend tariffs by highlighting the increased revenue they bring to the federal government, which is true. Since Trump took office, the US has brought in more than $100bn in revenue, compared with $77bn in the entire fiscal year 2024. The price of imports for consumers has only risen about 3 percent, but many expect that will change as the import taxes are passed on to consumers.

The White House did not respond to Al Jazeera’s request for comment.

United States inflation rose last month to its highest level since February as President Donald Trump’s sweeping tariffs push up the cost of a range of goods, including furniture, clothing, and large appliances.

Consumer prices rose 2.7 percent in June from a year earlier, the Labor Department said on Tuesday, up from an annual increase of 2.4 percent in May. On a monthly basis, prices climbed 0.3 percent from May to June, after rising just 0.1 percent the previous month.

Worsening inflation poses a political challenge for Trump, who promised during last year’s presidential campaign to immediately lower costs. The sharp inflation spike after the pandemic was the worst in four decades and soured most Americans on former President Joe Biden’s handling of the economy. Higher inflation will also likely heighten the US Federal Reserve’s reluctance to cut its short-term interest rate, as Trump is loudly demanding.

The central bank is expected to leave its benchmark overnight interest rate in the 4.25 percent to 4.5 percent range at a policy meeting later this month.

Trump has insisted repeatedly that there is “no inflation”, and because of that, the central bank should swiftly reduce its key interest rate from its current level. Yet Fed Chair Jerome Powell has said that he wants to see how the economy reacts to Trump’s duties before reducing borrowing costs. Minutes of the central bank’s June 17-18 meeting, which were published last week, showed only “a couple” of officials said they felt rates could fall as soon as the July 29-30 meeting.

Excluding the volatile food and energy categories, core inflation increased 2.9 percent in June from a year earlier, up from 2.8 percent in May. On a monthly basis, it picked up 0.2 percent from May to June. Economists closely watch core prices because they typically provide a better sense of where inflation is headed.

The uptick in inflation was driven by a range of higher prices. The cost of gasoline rose 1 percent just from May to June, while grocery prices increased 0.3 percent. Appliance prices jumped for the third straight month. Toys, clothes, audio equipment, shoes, and sporting goods all got more expensive, and are all heavily imported.

“You are starting to see scattered bits of the tariff inflation regime filter in,” said Eric Winograd, chief economist at asset management firm AllianceBernstein, who added that the cost of long-lasting goods rose last month, compared with a year ago, for the first time in about three years.

Winograd also noted that housing costs, one of the biggest drivers of inflation since the pandemic, have continued to cool, which is holding down broader inflation. The cost of rent rose 3.8 percent in June compared with a year ago, the smallest yearly increase since late 2021.

“Were it not for the tariff uncertainty, the Fed would already be cutting rates,” Winograd said. “The question is whether there is more to come, and the Fed clearly thinks there is,” along with most economists.

Trump has imposed sweeping duties of 10 percent on all imports, plus 50-percent levies on steel and aluminium, 30 percent on goods from China, and 25 percent on imported cars. Just last week, the president threatened to hit the European Union with a new 30 percent tariff starting August 1.

He has also threatened to slap 50 percent duties on Brazil, which would push up the cost of orange juice and coffee. Orange prices leapt 3.5 percent just from May to June, and are 3.4 percent higher than a year ago.

Overall, grocery prices rose 0.3 percent last month and are up 2.4 percent from a year earlier. While that is a much smaller annual increase than before the pandemic, it is slightly bigger than the pre-pandemic pace of food price increases. The Trump administration has also placed a 17-percent duty on Mexican tomatoes.

Powell under fire

The acceleration in inflation could provide a respite of sorts for Powell, who has come under increasingly heavy fire from the White House for not cutting the benchmark interest rate.

The Fed chair has said that the duties could both push up prices and slow the economy, a tricky combination for the central bank since higher costs would typically lead the Fed to hike rates while a weaker economy often spurs it to reduce them.

Trump on Monday said that Powell has been “terrible” and “doesn’t know what the hell he’s doing.” The president added that the economy was doing well despite Powell’s refusal to reduce rates, but it would be “nice” if there were rate cuts, because people would be able to buy housing a lot easier.”

Last week, White House officials also attacked Powell for cost overruns on the years-long renovation of two Fed buildings, which are now slated to cost $2.5bn, roughly one-third more than originally budgeted. While Trump legally cannot fire Powell just because he disagrees with his interest rate decisions, the Supreme Court has signalled, he may be able to do so “for cause,” such as misconduct or mismanagement.

Some companies have said they have or plan to raise prices as a result of the tariffs, including Walmart, the world’s largest retailer. Carmaker Mitsubishi said last month that it was lifting prices by an average of 2.1 percent in response to the duties, and Nike has said it would implement “surgical” price hikes to offset tariff costs.

But many companies have been able to postpone or avoid price increases, after building up their stockpiles of goods this spring to get ahead of the duties. Other companies may have refrained from lifting prices while they wait to see whether the US is able to reach trade deals with other countries that lower the duties.

United States President Donald Trump’s big tax and spending bill has faced backlash from both Democrats and fiscal hawks in his own party. But one proposal that has received rare bipartisan support from the start — eliminating taxes on tips.

The Senate bill passed on Tuesday, which mirrors the House bill passed last month, would deliver this campaign promise from Trump and had also been proposed by his Democratic opponent, former Vice President Kamala Harris.

The House plan lets workers deduct all reported tips from their taxable income, while the Senate version sets limits — $18,500 for individuals or $25,000 for joint filers — and phases it out for higher earners. The tax break would expire at the end of 2028.

If this bill passes, filers could deduct some or all of those tips starting in 2026.

Economists forecast that cutting tax on tips could increase the federal deficits by $100bn over the next decade.

Many restaurant workers continue to earn the federal tipped minimum wage, or subminimum wage, of just $2.13 per hour nationally. It is slightly higher in places like New York at $3.55 per hour. The law assumes that tips will bridge the gap to reach the $7.25 federal minimum wage.

A survey cited by the White House and conducted by a fintech firm found that 83 percent of restaurant workers support a no-tax-on-tips policy. Trump’s plan has been endorsed by the National Restaurant Association.

“The inclusion of the No Tax on Tips and No Tax on Overtime provisions recognises the value of our dedicated workforce. More than two million tipped servers and bartenders stand to benefit, while the overtime measure rewards the commitment of over 13 million hourly team members across the sector,” Michelle Korsmo, president and CEO of the National Restaurant Association, told Al Jazeera in a statement.

The bill at the surface promises to put more money in the pockets of servers, bartenders, and other tipped workers. But it has been criticised by worker-centric advocacy groups and restaurant workers themselves, who caution against embracing it too quickly because it also comes with cuts to Medicaid and SNAP, which workers in the restaurant industry disproportionately rely on.

“That is like one of like the biggest fears I have right now. I rely on SNAP myself. I rely on Medicaid. At one point, I didn’t have insurance because of the whole sub-minimum wage, ” Jessica Ordenana, a server at a Chili’s Restaurant in Queens, New York told Al Jazeera.

According to One Fair Wage, about 66 percent of tipped workers in the US don’t earn enough to pay federal income tax, so eliminating tax on tips wouldn’t help the majority of restaurant workers.

To put this in perspective, a worker earning $2.13 per hour, working 40 hours a week for 52 weeks, would earn just $4,430.40 annually. Employers are legally required to make up the difference if tips don’t bring workers to $7.25/hour, totalling $15,078 per year. Federal income taxes must be paid by those who make more than $14,600 annually. Many workers still fall short due to inconsistent schedules and unreliable tipping.

Work requirements complications

Restaurant tipped workers overwhelmingly rely on services like SNAP and Medicaid, and will now face new work requirements to get them.

For instance, the “One Big Beautiful Bill” includes a Medicaid work requirement that obligates able-bodied adults aged 19 to 64 to work at least 80 hours per month to remain eligible.

For many restaurant workers, this is simply not feasible. Not because of unwillingness, but because their hours depend on consumer demand.

According to Harvard Kennedy School’s The Shift Project, which studies workplace trends, one in five service sector workers reported having not as many hours as they would like and saw a 34 percent fluctuation in the number of hours week to week.

“I’m actually having a hard time at Chili’s because they went from giving me my full like four or five days a week, to now just one day a week. It really varies week to week,” Ordenana said.

“When I ask for another day on the schedule [the manager] tells me, yeah, yeah sure. And then they don’t even put me on the schedule. So last week, I didn’t work at all,”  Ordenana said.

Demand for eating out has started to slump as Americans tighten purse strings in the face of a slowing economy and uncertainty over the impact of Trump’s tariffs.

Consumer Price Index data showed that spending on eating out was flat for three months from February to April and has started to decline heading into the middle of the year.

Consumer spending is projected to drop by 7 percent over the middle of the year, according to KPMG’s Consumer Pulse report.

As a result, One Fair Wage estimates that 45 percent of restaurant workers currently enrolled in Medicaid could lose their health insurance because of the possible downturn in hours because of slumping demand.

“More tipped restaurant workers would lose their Medicaid than would gain small tax benefits. This is not the right solution,” Saru Jayaraman, founder of the advocacy group One Fair Wage told Al Jazeera.

“Why are these workers on Medicaid to begin with? Because they earn a sub-minimum wage and can’t afford to take care of themselves.”

SNAP benefits face a similar threat. The Center on Budget and Policy Priorities, a left-leaning think tank, forecasts that the tax bill could lead to as many as 11 million people, including restaurant workers, losing access to critical benefits. The House bill would cut $300bn from SNAP over the next 10 years and the Senate bill would cut $211bn.

“Those cuts have to come out of benefits or eligibility. There is just no way that cuts to administrative costs, to streamline waste, fraud, and abuse, or whatever the talking points are about thinking. Those are benefits to eligible people. To achieve that kind of savings, you have to cut benefits to people. There’s no way around it. And that’s devastating,” Ed Bolen, director of SNAP State Strategies at Center on Budget and Policy Priorities, told Al Jazeera.

Nationwide, 18 percent of restaurant workers rely on SNAP benefits, including Ordenana.

“How am I going to eat? How am I gonna survive? How am I going to pay rent? And then on top of that, I might lose benefits? How is this happening in America?”  Ordenana asked rhetorically.

Canada had approved a 3 percent digital tax last year in June, and the first set of payments is due on Monday.

United States President Donald Trump has announced that the US is immediately ending trade talks with Canada in response to the country’s digital services tax on technology companies, marking a clear escalation of pressure tactics.

Trump, in a post on his Truth Social platform on Friday, called the Canadian tax a “direct and blatant attack on our country” and said, “Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately.”

He added, “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.”

Canada had approved the Digital Services Tax Act on June 20, 2024, and it came into force shortly after on June 28. Under this, Canada will charge a tax of 3 percent on the digital services revenue a firm makes from Canadian users above 20 million Canadian dollars ($14.6m) in a calendar year.

Businesses have been calling for a pause, saying it would increase the cost of providing services, as well as risk drawing the wrath of the US government. But the Canadian federal government so far has refused and is proceeding with the plans. The Canadian Revenue Authority is set to start collecting the tax on Monday and will cover revenue retroactively from 2022.

Last week, Finance Minister Francois-Philippe Champagne suggested to reporters that the digital tax may be negotiated as part of broader, ongoing US-Canada trade discussions, Bloomberg News reported. Those discussions seemed to have been going well, and a trade deal was expected in July. Now, the status of that deal is unclear.

Carney’s office issued a brief statement on Friday saying, “The Canadian government will continue to engage in these complex negotiations with the United States in the best interests of Canadian workers and businesses.”

‘Escalation’

“This is definitely escalation from Trump,” said Vina Nadjibulla, vice president of research and strategy at the Asia Pacific Foundation of Canada. “But we have seen this tactic before. Canada will need to work behind the scenes to find an off-ramp without giving in to his demands,” she said.

“Digital tax is also part of Trump’s negotiations with the European Union [which has similar levies]. Canada will need to coordinate with the EU and other partners as it contemplates its response,” Nadjibulla added.

Rachel Ziemba, adjunct senior fellow at the Center for a New American Security, told Al Jazeera that while Trump’s declaration was unfortunate, it was “not surprising”, adding that it would also act as a scare tactic for the European Union, with whom the US is still negotiating its trade deal.

Tariffs on Canadian goods are bad for both the US and Canada as they increase the cost for businesses and ultimately consumers, experts say.

Canada is the second-largest trade partner for the US after Mexico, and last year, it bought $349.4bn of US goods and exported $412.7bn, according to US Census Bureau data. Canada has already been hit by Trump’s tariffs on steel and aluminium, as well as some auto parts and cars. The Canadian economy has started to slow down, and unemployment is at a high 7 percent.

In an emailed statement to Al Jazeera, Candace Laing, president and CEO of the Canadian Chamber of Commerce, said that while “some last-minute surprises should be expected” as negotiations approach deadlines, “our position on the Digital Services Tax has been consistent, but primarily for the reason that it’s self-defeating in nature”.

“That said, it’s a pivotal time for Canada-US relations. The tone and tenor of talks has improved in recent months, and we hope to see progress continue,” Laing said.