Canada Scraps Digital Services Tax Amid US Pressure, Trade Talks Set to Resume
Canada Scraps Digital Services Tax Amid US Pressure, Trade Talks Set to Resume
Canada has abruptly abandoned its controversial plan to impose a new digital services tax on major American technology firms, a decision made just hours before the levy was set to take effect. The move follows intense pressure from U.S. President Donald Trump, who had fiercely condemned the tax as a direct attack on American interests and halted ongoing trade negotiations.
The proposed 3% levy on revenue from Canadian users, which would have impacted companies like Amazon, Google, Meta, Uber, and Airbnb, was slated to begin on Monday, June 30, 2025. However, Canadian Prime Minister Mark Carney revealed that he spoke with President Trump on Sunday night, June 29, agreeing to halt the tax to facilitate the resumption of stalled trade discussions.
President Trump had previously terminated trade talks on Friday, June 27, threatening new tariffs on Canadian goods after Canada initially indicated it would proceed with the tax. He had publicly warned that the “foolish” move would not end well for Canada economically.
Canadian Finance Minister François-Philippe Champagne is now set to introduce legislation to formally rescind the tax. Canada’s finance ministry stated that while the tax was originally intended to ensure large tech companies pay their fair share, the country’s preference has always been a multilateral agreement on digital services taxation. Both nations are now focused on reviving trade negotiations ahead of a critical July 21 deadline.
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