President Donald Trump on Friday announced that he is temporarily halting all trade negotiations with Canada regarding its Digital Services Tax policy aimed at hitting American technology companies. In a Truth Social post, the 78-year-old stated that Ottawa had notified his administration that the tax would become effective starting Monday.
Trump Calls DST of Canada a ‘Blatant Attack’ on U.S. Tech Companies
“We have just been informed that Canada, a very difficult Country to TRADE with, including the fact that they have charged our Farmers as much as 400% Tariffs, for years, on Dairy Products, has just announced that they are putting a Digital Services Tax on our American Technology Companies, which is a direct and blatant attack on our Country,” Trump said in his post.
Accuses Canada of Copying EU’s Digital Tax Approach
Donald Trump also alleged that Canada is ‘copying the European Union, who have done the same thing, and are negotiating with us, too’.
“Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately. 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.”
Canada’s Digital Services Tax: What It Is and Who It Targets
Canada introduced a 3% Digital Services Tax (DST) on revenue from certain digital services offered to Canadian consumers through the Digital Services Tax Act, which took effect on June 28, 2024, after receiving royal assent on June 20, 2024.
It hones in on large enterprises with international revenue of €750 million (~US$801 million) and Canadian digital services revenue of more than C$20 million (~US$14.8 million) per annum.
Four Revenue Categories Covered Under the DST
The levy has a retroactive effect to income generated since January 1, 2022, with the initial payment due by June 30, 2025. It extends to four categories of revenues: online marketplace services, online advertising (e.g., Google), social media services, and sales or licensing of Canadian user information.