Canada Cancels Digital Services Tax to Resume US Trade Talks
Wafricnews - June 30, 2025
Ottawa — Canada has announced it will scrap its controversial digital services tax in a bid to bring the United States back to the negotiating table after weeks of escalating trade tensions.
Ottawa — Canada has announced it will scrap its controversial digital services tax in a bid to bring the United States back to the negotiating table after weeks of escalating trade tensions.
The move comes after US President Donald Trump abruptly canceled trade talks on Friday, calling the tax — designed to target online companies — a “direct and blatant attack on our Country.”
In a statement late Sunday, Canadian officials said they were stepping back from the tax to help reset relations with their largest trading partner.
“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,” the statement read.
The Canadian government confirmed that Prime Minister Mark Carney and President Trump had agreed to resume negotiations, aiming for a new deal by July 21, 2025.
Background on the Dispute
Digital services taxes allow countries to collect revenue from online platforms, rather than only physical goods. But President Trump has repeatedly slammed them as “non-tariff trade barriers” designed to limit US tech companies from fairly competing abroad.
Digital services taxes allow countries to collect revenue from online platforms, rather than only physical goods. But President Trump has repeatedly slammed them as “non-tariff trade barriers” designed to limit US tech companies from fairly competing abroad.
Canada’s DST, which was scheduled to take effect on Monday with retroactive charges reaching back to 2022, had been a particular sore spot for Trump. He had warned of punishing tariffs — including a 25% levy on all Canadian exports — if the tax went ahead.
The uncertainty around Trump’s trade policies has rattled businesses in both countries, with many companies hesitating to make investment plans until new agreements are in place.
Meanwhile, the clock is ticking for dozens of other US trading partners facing a July 9 deadline to negotiate trade deals or risk retaliatory tariffs. Trump could extend that date, but the White House has not yet confirmed whether it will do so.
Canada remains America’s largest export market, importing $349 billion worth of US goods last year, while sending $413 billion in goods south of the border, making it America’s third-largest foreign supplier.
As talks restart, business leaders on both sides will be hoping the removal of the DST clears the way for a stable, mutually beneficial deal.
By Wafricnews Desk.
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