Canada To Resume Trade Talks With US After Ditching Digital Tax 

Canada rescinded a digital services tax this week in a bid to advance trade talks with the United States, a decision that followed the Trump administration’s decision to end negotiations and threaten to create new tariffs on the country’s exports, the Guardian reported. 

On Sunday, the Canadian government announced that it is withdrawing the tax measure, adding that the country’s Prime Minister Mark Carney and US President Donald Trump would resume talks to reach a deal by July 21. 

The decision comes as Canada and the US have been engaged in trade talks for months. But the negotiations ended Friday after Trump accused Ottawa of imposing unfair taxes on American technology companies in a “direct and blatant attack on our country.” 

The president also threatened to impose new tariffs on Canadian goods later this week. 

Canada’s digital services tax would have imposed a three percent levy on revenues earned from Canadian users by tech firms generating more than $14 million annually. It would have applied to both domestic and foreign companies, including US tech giants Amazon and Google. 

First introduced in 2020, the Canadian government said the tax would address the gap that allowed large tech firms to generate substantial profits in Canada without paying local taxes.

It would have applied retroactively to 2022 and was to be collected Monday before the government’s move, according to CNBC.  

Canada is the US’ second-largest trading partner after Mexico: In 2024, US trade with Canada totaled roughly $762 billion. 

Canada’s reversal follows similar developments in the European Union and the United Kingdom, where pressure from Washington has influenced policy on taxing the tech giants, Politico added. 

European leaders are debating whether to soften provisions in the Digital Markets Act to facilitate trade deals with Washington, as US tariffs are set to kick in next week.