Canada’s government announced late Sunday that it would scrap its digital services tax on U.S. technology companies, paving the way for the resumption of trade talks that President Trump suspended late last week.
Canada’s government had planned to begin collecting the tax on Monday but said Sunday it no longer would do so “in anticipation of a mutually beneficial comprehensive trade agreement with the United States,” according to Canada’s Department of Finance.
Officials said Canadian Prime Minister Mark Carney and Trump agreed to resume negotiations, aiming to strike a deal by July 21.
“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,” 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,” he added.
The news comes after Carney confirmed on Friday that Canada still planned to collect its tax on digital companies that generate revenue from Canadian users. The tax would have applied retroactively, forcing U.S. companies to pay $2 billion by the end of the month, The Associated Press noted.
Trump, on Friday, called the tax a “direct and blatant attack on our Country.”
“Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately,” Trump wrote in a Truth Social post.
A political science professor at McGill University in Montreal labeled the latest development a “clear victory” for Trump in remarks to the AP.
“At some point this move might have become necessary in the context of Canada-U.S. trade negotiations themselves but Prime Minister Carney acted now to appease President Trump and have him agree to simply resume these negotiations, which is a clear victory for both the White House and big tech,” Daniel Béland said.
The White House also touted the news as a “victory” in a statement to The Hill.
“President Trump has once again leveraged the power of the American economy, the best and biggest in the world, to deliver a victory for American industries and workers,” White House spokesman Kush Desai said.
Updated at 10:20 a.m. EDT
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