Canada rescinds tax on US tech firms in hopes of Trump trade deal
OTTAWA: Canada will rescind the taxes affecting US tech firms that prompted President Donald Trump to call off trade talks, Ottawa said on Sunday, adding that negotiations with Washington will resume.
The digital services tax, enacted last year, would have required US service providers such as Alphabet and Amazon to make a multi-billion-dollar payment to Canada by Monday, analysts said.
Washington had previously requested dispute-settlement talks over the tax. But on Friday, Trump, who has weaponised US financial power through tariffs, announced he was ending trade talks with Ottawa in retaliation for the levy. He also warned that Canada would learn its new tariff rate within the week.
On Sunday, Ottawa binned the tax, which had been forecast to raise Can$5.9 billion (US$4.2 billion) over five years.
Finance Minister 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,” a government statement said. It added that Trump and Canadian Prime Minister Mark Carney “have agreed that parties will resume negotiations with a view to agreeing on a deal by July 21, 2025.”
There was no immediate comment from the White House or Trump.
US Treasury Secretary Scott Bessent told CNBC on Friday that Washington had hoped Carney’s government would halt the tax “as a sign of goodwill.”
Canada has been spared some of the sweeping duties Trump has imposed on other countries, but it faces a separate tariff regime. Since returning to the White House in January, Trump has also imposed steep levies on imports of steel, aluminium and autos. Canada is the largest foreign supplier of steel and aluminium to the United States.
Last week, Carney said Ottawa will adjust its 25% counter-tariffs on US steel and aluminium—in response to a doubling of US levies on the metals to 50%—if a bilateral trade deal is not reached within 30 days. “We will continue to conduct these complex negotiations in the best interests of Canadians,” Carney said on Friday.
He had previously said a good outcome would be to “stabilise the trading relationship with the United States” and secure “ready access to US markets for Canadian companies” while “not having our hands tied in terms of our dealings with the rest of the world.”
Carney and Trump met on the sidelines of the Group of Seven summit in Canada earlier this month. Leaders at the summit pushed Trump to back away from his punishing trade war.
Dozens of countries face a July 9 deadline for steeper US duties to kick in—rising from the current 10%. It remains to be seen whether they will reach agreements before the deadline.
Bessent has said Washington could wrap up its agenda for trade deals by September, indicating more agreements could be concluded, although talks are likely to extend past July.
By RSS/AFP
