Canadian Prime Minister Mark Carney is set to resume trade negotiations with U.S. President Donald Trump following Canada’s announcement late Sunday that it is rescinding its digital services tax on American technology companies.
The Canadian government said it was rescinding the Digital Services Tax “in anticipation of a mutually beneficial comprehensive trade arrangement with the United States.”
“Consistent with this action, Prime Minister Carney and President Trump have agreed that parties will resume negotiations with a view towards agreeing on a deal by July 21, 2025,” Canada’s Department of Finance said in a news release, according to Fox Business.
The government also announced that the scheduled collection on June 30, 2025, will be halted, and legislation is in the works to repeal the Digital Services Tax Act.
Canada’s digital services tax, which took effect in June 2024, imposes a 3% levy on revenue generated by large companies—domestic or foreign—that engage with online users in Canada and meet specific criteria.
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Trump ended trade talks with Canada on Friday, citing the tax on American tech giants such as Amazon, Meta, Google, and Apple as the primary reason for the suspension, Fox reported.
“They are obviously copying the European Union, which has done the same thing, and is currently under discussion with us, also. Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately,” Trump noted in a Truth Social post.
Trump announced that his administration will notify Canada within the “next seven-day period” of the tariff it will be required to pay to do business with the United States.
In his statement, Trump described Canada as “a very difficult Country to TRADE with” and accused it of imposing tariffs as high as 400% on U.S. dairy products.
The collapse in trade negotiations came after the two leaders met at the G7 summit earlier this month, where Carney stated they had agreed to finalize a new economic deal within 30 days.
The United States is Canada’s largest trading partner, while Canada ranks as the top importer of American exports and one of the three leading sources of U.S. imports.
Although Canada was initially exempt from the sweeping tariffs President Trump imposed in April, it now faces 50% duties on steel and aluminum.
Last month, Trump said that Canada was “considering” handing away its statehood in exchange for free protection from the proposed “Golden Dome” missile defense system, despite repeated statements from Canadian authorities that the nation is not for sale.
“I told Canada, which very much wants to be part of our fabulous Golden Dome System, that it will cost $61 Billion Dollars if they remain a separate, but unequal, Nation, but will cost ZERO DOLLARS if they become our cherished 51st State. They are considering the offer!” Trump wrote on Truth Social.
Carney, who won an election the previous month in part because of Canadians’ resistance to Trump’s desire to incorporate the nation into the United States, informed the U.S. president earlier in May that his country “won’t be for sale, ever.”
King Charles III, Canada’s acknowledged ruler, delivered a speech to the Canadian Parliament on Tuesday that appeared to reject Trump’s proposal to purchase the North American country and make it the 51st state of the United States.
Regarding the “Golden Dome,” Trump said last week that the United States had formally picked the design for the missile defense system, which would establish a network of satellites to detect, track, and potentially intercept incoming ballistic missiles.
The US president stated that the project will cost $175 billion to develop and would be “fully operational” within three years. He also announced that Canada will be included in its safety net.
“Canada has called us, and they want to be a part of it. So we’ll be talking to them; they want to have protection also,” Trump said at the time.