Prime Minister Mark Carney said on Monday that Canada has resumed trade talks with the United States. The announcement came after Canada revoked its plan to tax American technology companies.
Trump Halted Talks Over Digital Tax
On Friday, US President Donald Trump reacted sharply to Canada’s decision to go ahead with the Digital Services Tax (DST). He called it a “direct and blatant attack on our country.”
In response, Trump suspended all trade negotiations with Canada the same day. He also warned that the US would soon announce tariffs on Canadian goods.
He wrote on Truth Social, “We will let Canada know the tariff that they will be paying to do business with the United States of America within the next seven-day period.”
Ottawa Withdraws DST to Save Trade Talks
To defuse the situation, Canada’s Finance Minister Francois-Philippe Champagne confirmed the government’s move to drop the tax. He said Canada now expects a “mutually beneficial comprehensive” trade deal with the US.
The government issued a statement saying, “Canada would rescind the Digital Services Tax (DST) in anticipation of a mutually beneficial comprehensive trade arrangement with the United States.” The US and Canada have agreed to restart trade talks immediately. Both sides aim to finalize a deal by July 21, 2025.
What Is the Digital Services Tax?
Canada originally planned to start collecting the DST on June 30. The tax would apply to Canadian and foreign tech companies that earn money from Canadian users.
The policy mainly targeted large US firms like Google, Amazon, and Meta. Canada argued that these companies should pay tax on revenues made inside its borders.
US Officials Strongly Opposed the Tax
The plan drew heavy criticism from US lawmakers and trade officials. They claimed it unfairly singled out American companies and risked damaging US-Canada relations. Trump acted fast. He saw the tax as hostile and shut down trade discussions. His threat of tariffs added pressure on Ottawa to change course.
Trade Talks Now Back on Track
With the tax withdrawn, both countries have returned to the negotiating table. Leaders from both sides now hope to avoid further conflict and reach a deal that benefits both nations.