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Canada has canceled its digital services tax aimed at US tech companies in an effort to move trade talks forward with the United States, the finance ministry said in a statement on Sunday. This decision came just days after US President Donald Trump ended the ongoing trade negotiations.
In a statement Sunday night, the Canadian government said it was withdrawing the tax in an effort to encourage both countries to return to negotiations.
“To support those negotiations, the Minister of Finance and National Revenue, the Honourable François-Philippe Champagne, announced today that Canada would rescind the Digital Services Tax (DST) in anticipation of a mutually beneficial comprehensive trade arrangement with the United States,” according to the statement.
Prime Minister Carney and President Trump will resume negotiations
“Consistent with this action, Prime Minister Carney and President Trump have agreed that parties will resume negotiations with a view towards agreeing on a deal by July 21, 2025.”
Canadian Prime Minister Mark Carney and Trump will start the trade talks again to try and make a deal by July 21, 2025, the ministry said.
On Friday, Trump suddenly called off trade discussions with Canada over the tax on US tech firms. He said it was a “blatant attack” and said he would put a new tariff on Canadian products within the next week.
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The digital services tax was 3% of the revenue a company makes from Canadian users over $20 million in a year, and it was supposed to be applied retroactively to 2022.
Canada, second-largest trading partner of the US
Canada is the second-largest trading partner of the United States, behind Mexico. It is also the biggest buyer of US exports. Last year, Canada bought $349.4 billion in American goods and sold $412.7 billion to the US, based on figures from the US Census Bureau.
The tax and trade tension had created concern among officials, but the move to drop the tax could ease talks.
