Ottawa announced on Sunday that Canada will remove taxes affecting U.S. technology companies, which had led President Donald Trump to suspend trade discussions. The country also stated that talks with Washington would be restarted soon.
The recently implemented digital services tax, which came into effect last year, was expected to result in American corporations like Alphabet and Amazon owing a substantial sum of money—billions of dollars—to Canadian authorities by this coming Monday, according to industry experts.
Washington had earlier sought dispute resolution discussions regarding the tax — however, on Friday, President Trump, known for using U.S. economic might through tariffs as a tool, announced he would terminate trade negotiations with Ottawa in response to the levy.
He additionally cautioned that Canada would discover its updated tariff rate before the end of the week.
However, on Sunday, Ottawa scrapped the tax, which was expected to generate Can$5.9 billion (US$4.2 billion) over half a decade.
The Finance Minister, François-Philippe Champagne, announced in a governmental release that Canada will withdraw the Digital Services Tax (DST) following expectations for an advantageous broad-spectrum trade agreement with the United States.
The statement also noted that Trump and Canadian Prime Minister Mark Carney have concurred that the parties will reconvene for talks aimed at reaching an agreement by July 21, 2025.
The White House and Trump did not provide an instant response.
US Treasury Secretary Scott Bessent informed CNBC on Friday that Washington was hoping for Carney’s administration to stop the tax as an act of good faith.
While Canada has avoided some of the broad-ranging tariffs imposed by Trump on other nations, it still confronts a distinct set of import taxes.
After his return to the White House in January, Trump has additionally enforced significant tariffs on imported steel, aluminum, and automobiles.
The biggest source of imported steel and aluminum for the U.S. comes from Canada.
Last week, Carney stated that Ottawa plans to modify its 25 percent retaliatory tariffs on U.S. steel and aluminum — as a reaction to the U.S. increasing its duties on these materials to 50 percent — should a two-way trade agreement fail to be achieved within thirty days.
Carney stated on Friday that we will keep conducting these intricate negotiations in the best interests of Canadians.
Earlier, he stated that a successful result from the discussions would involve "establishing a steady trade relationship with the United States" along with "unrestricted entry into U.S. markets for businesses based in Canada," all while ensuring "we retain our freedom to engage with the global community without limitations."
Carney and Trump had a meeting on the fringes of the Group of Seven summit in Canada earlier this month. The leaders at the summit urged Trump to retreat from his aggressive trade war stance.
Many nations confront a July 9 ultimatum after which more stringent U.S. tariffs will take effect, increasing from their present rate of 10 percent.
We shall have to wait and see if they manage to reach agreements before the deadline.
Bessent mentioned that Washington might complete its list of trade deal objectives by September, suggesting that additional accords could potentially be finalized. However, she also implied that negotiations would probably continue beyond July.