Canadian Prime Minister Mark Carney announced Sunday that Canada has dropped its planned digital services tax on U.S. tech firms, prompting President Donald Trump to agree to resume stalled U.S.-Canada trade talks. The move averts a looming trade rupture ahead of a key July 21 negotiating deadline.
The 3% tax, which would have applied retroactively to companies like Amazon, Meta, and Google, was scheduled to take effect Monday, potentially costing U.S. firms $2 billion. Trump called the tax “a direct and blatant attack,” suspending trade negotiations last week in response.
Carney and Trump spoke Sunday and agreed to renew talks. “Rescinding the digital services tax will allow negotiations… to make vital progress,” said Canadian Finance Minister François-Philippe Champagne. The tax had drawn concern from both U.S. officials and major tech companies.
Analysts say Carney’s reversal signals a victory for Trump, who has imposed steep tariffs on Canadian goods and threatened further penalties if talks stall.
Tariff decisions are expected following the expiration of a 90-day negotiation window on July 9.
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