President Donald Trump said on June 27 that he was ending all trade negotiations with Canada over Canada’s digital services tax.
The Canadian government is rescinding its digital services tax to avoid stalling trade talks with the United States, two days after U.S. President Donald Trump announced he would end negotiations over the levy.
Ottawa says that removing the tax will put Canada back on track to reach a trade deal with the United States by July 21.
Trump said on June 27 that he is ending all trade negotiations with Canada over Canada’s digital services tax (DST), which would impact U.S.-based tech companies such as Amazon, Google, and Netflix.
“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 Mark Carney said in a statement after announcing the removal of the tax on June 29.
“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.”
During the G7 summit in Kananaskis, Alberta, on June 16, Carney and Trump agreed to reach a trade deal within 30 days.
The DST imposed a 3 percent tax on revenue that tech companies earn from digital services provided to Canadian users. It was scheduled to go into effect on June 30, and was retroactive to 2022, leaving U.S. tech companies with a $2 billion bill to pay by the end of June.
The Canadian tax had been an irritant to both the Biden and Trump administrations.
“Based on this egregious Tax, we are hereby terminating all discussions on trade with Canada, effective immediately,” Trump said on June 27. “We will let Canada know the Tariff that they will be paying to do business with the United States of America within the next seven day period.”
The Trump administration has already imposed 25 percent tariffs on Canadian products, though goods falling under the U.S.–Mexico–Canada Agreement have been exempted. Washington has also imposed blanket tariffs on all steel and aluminum imports.
