Canada rescinded its controversial digital services tax on Sunday, reversing course after U.S. President Donald Trump abruptly suspended trade talks in response to the levy. The move paves the way for negotiations to resume between the two nations, whose bilateral trade reached $762 billion last year, according to the U.S. Trade Representative's office.
Canadian Prime Minister Mark Carney confirmed the decision in a statement, saying it was made "in anticipation" of a deal with Washington. The digital tax, originally scheduled to take effect Monday, would have imposed a 3% charge on revenue from online services provided to Canadian users, targeting firms such as Google, Amazon, Meta, and Uber.
Trump had harshly criticized the tax, calling it "a direct and blatant attack on our country" and comparing it to European Union efforts to regulate U.S. tech firms. "They are obviously copying the European Union, which has done the same thing," Trump wrote Friday on Truth Social.
By Sunday, Trump and Carney had spoken by phone and agreed to resume trade talks, according to the Canadian Prime Minister's Office. "Today's announcement will support a resumption of negotiations toward the July 21, 2025, timeline set out at this month's G7 Leaders' Summit in Kananaskis," Carney stated.
The tax's retroactive component, which would have left American firms with an estimated $2 billion bill, had intensified the standoff. Canada's Finance Ministry acknowledged the timeline but stressed it would "take as long as necessary, but no longer, to achieve that deal."
Trump's broader trade strategy has drawn both support and legal scrutiny. The administration is levying tariffs of up to 25% on Canadian and Mexican products, and a 50% tariff on steel and aluminum. A 10% blanket import tax on most countries is also in effect, with potential increases pending by July 9 following a 90-day negotiation window.
