Canada canceled a digital service tax on U.S. technology companies this week in order to preserve trade talks with U.S. President Donald Trump, but another irritant, in agriculture, could be a bigger thorn in the ongoing negotiations.

WASHINGTON—President Trump said he terminated trade talks with Canada over what he called an “egregious” digital-services tax on U.S. tech companies, plunging relations with America’s second-largest trading partner back into turmoil.

The government said on Sunday night that it would cancel its tax on American technology companies, handing a victory to the Trump administration.