Canada bends knee on key tax after Trump pulls plug on trade talks

Canada announced Sunday that it is rescinding its digital services tax (DST) in an attempt to restart trade negotiations with the U.S. government.

Canada’s finance minister, François-Philippe Champagne, announced in a statement that the tax would be revoked “in anticipation of a mutually beneficial comprehensive trade arrangement” with the United States. The announcement comes after President Donald Trump announced Friday that he was scrapping trade talks with Canada over the country’s decision to impose a DST on U.S. technology companies, which he referred to as a “direct and blatant attack on our Country” in a Truth Social post, adding that the tax was “egregious.”

“In our negotiations on a new economic and security relationship between Canada and the United States, Canada’s new government will always be guided by the overall contribution of any possible agreement to the best interests of Canadian workers and businesses,” Prime Minister of Canada Mark Carney said in a statement. “Today’s announcement will support a resumption of negotiations toward the July 21, 2025, timeline set out at this month’s G7 Leaders’ Summit in Kananaskis.”

Canada’s DST would have made U.S. tech companies face a 3% charge on Canadian revenue over $20 million, according to the BBC.

Champagne wrote in a statement that the Canadian government is focused on “building the strongest economy in the G7 and standing up for Canadian workers and businesses.”

“Canada’s new government is focused on building the strongest economy in the G7 and standing up for Canadian workers and businesses,” Champagne said in the statement. “Rescinding the digital services tax will allow the negotiations of a new economic and security relationship with the United States to make vital progress and reinforce our work to create jobs and build prosperity for all Canadians.”

The White House and Canada’s Department of Finance did not immediately respond to a request for comment.

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