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Canada folds on digital services tax after Trump suspends trade talks

Canadian Prime Minister Mark Carney will resume trade talks with U.S. President Donald Trump after Canada said late Sunday it was rescinding a digital services tax on American tech companies. 

The Canadian government said it was rescinding the Digital Services Tax "in anticipation of a mutually beneficial comprehensive trade arrangement with the United States." 

"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," Canada’s Department of Finance said in a news release.  

It added that a June 30, 2025 collection will be halted, and legislation is pending to rescind the Digital Services Tax Act.

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President Donald Trump meets with Canadian Prime Minister Mark Carney at the G7 summit in Kananaskis, Alberta, Canada, on June 16, 2025.
President Donald Trump meets with Canadian Prime Minister Mark Carney at the G7 summit in Kananaskis, Alberta, Canada, on June 16, 2025. (Reuters/Kevin Lamarque / Reuters)

 

Canada's digital services tax took effect in June 2024 and requires large businesses, whether they're headquartered in Canada or elsewhere, to pay a 3% tax on revenue earned from engaging with online users in Canada if they meet certain conditions. 

Trump terminated trade discussions with Canada on Friday, citing the digital services tax on American tech companies like Amazon, Meta, Google, and Apple, among others, as the reason. 

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"They are obviously copying the European Union, which has done the same thing, and is currently under discussion with us, also. Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately," Trump wrote in a post on Truth Social.

 

Mark Carney April 2025 rally
Mark Carney, Canada's prime minister, speaks during a campaign rally in Calgary, Alberta, Canada, on Tuesday, April 8, 2025. (Gavin John/Bloomberg / Getty Images)

 

Trump said the administration will inform Canada within the "next seven day period" of what tariff it will pay to do business with the U.S.

The president added in his post that Canada is "a very difficult Country to TRADE with" and claimed that Canada has levied tariffs of up to 400% on U.S. dairy products.

The breakdown in trade talks followed the two leaders’ G7 meeting early this month, and Carney saying they had agreed to wrap up a new economic agreement within 30 days.

 

Trump and Bessent in the Middle East
ABU DHABI, UNITED ARAB EMIRATES - MAY 16: U.S. President Donald J. Trump speaks during a US-UAE Investment Forum alongside U.S. Secretary of the Treasury, Scott Bessent (R) at Qasr al-Watan, presidential palace of the United Arab Emirates, on May 16, (Photo by Win McNamee/Getty Images / Getty Images)

 

The U.S. is Canada's largest trading partner, while Canada is the largest importer of American exports and one of the top three sources of U.S. imports.

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Canada had escaped Trump's broad tariffs imposed in April but faces 50% duties on steel and aluminum.

FOX Business’ Eric Revell and Reuters contributed to this report. 

Author: Bradford Betz, FOXBusiness

Source: Fox News:

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