Canada drops digital tax to boost US trade talks
3 Min Read
Canada cancels its planned 3% digital services tax on major US tech companies like Amazon and Google, aiming to revive stalled trade talks with the United States by July 21.
-
Canadian Prime Minister Mark Carney is greeted by President Donald Trump as he arrives at the West Wing of the White House, Tuesday, May 6, 2025, in Washington. (AP)
Canada abandoned its planned digital services tax aimed at US technology companies late on Sunday, just hours before the policy was set to come into force, as part of an effort to move forward with stalled trade talks with the United States.
The Canadian Finance Ministry announced in a statement that Prime Minister Mark Carney and US President Donald Trump will restart trade talks to reach an agreement by July 21.
The now-scrapped digital tax would have imposed a 3% levy on digital services revenue exceeding $20 million annually from Canadian users, with payments retroactive to 2022, targeting major US tech companies such as Amazon, Meta, Google, and Apple.
This development comes after the United States announced an abrupt halt to all trade talks with its northern neighbor in response to the digital tax.
On June 27, US President Donald Trump declared that the United States would immediately suspend all trade negotiations with Canada following Ottawa's move to implement a new tax targeting American technology companies.
Taking to Truth Social, Trump stated, “We have just been informed that Canada… 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."
The US President described the tax as egregious, declared an end to all talks between the US and Canada, all while announcing plans to impose new tariffs on Canadian imports within the next week.
Tensions still palpable
Tensions between Canada and the US have been on the rise since Trump announced his plans to make Canada the 51st state, in addition to his imposition of tariffs on Canada, citing drug trafficking.
During their meeting last month, Canadian Prime Minister Mark Carney told US President Donald Trump in clear terms that Canada is not for sale.
During their discussion, Carney and Trump covered various subjects such as Canada’s sovereignty, defense policies, trade relations, and tariff issues, maintaining a diplomatic tone throughout the conversation while carefully steering clear of any potential friction or confrontation.
Carney's stance sharply diverged from Trump's frequent assertions about potentially annexing Canada as the 51st state, yet the two leaders preserved a cordial atmosphere during their discussion, particularly when Carney, speaking in measured but resolute terms, emphasized that certain territories will never be up for negotiation.
