Canada and US resume trade talks after tech tax plan suspension
Trade discussions between Canada and the United States have resumed momentum after Canada opted to retract its suggested digital services tax aimed at American tech firms, as stated by Canadian Prime Minister Mark Carney on Monday. This development follows US President Donald Trump’s decision on Friday (June 27) to halt discussions, criticizing Canada’s digital tax plan as “a direct and blatant attack on our country.” The Canadian government has announced the cancellation of the Digital Services Tax, which was set to be implemented on Monday. This decision is framed as a strategic gesture made “in anticipation” of achieving a more comprehensive trade agreement, according to reports from the Associated Press.
Carney’s office reports that both leaders have reached an agreement to proceed with discussions. “This decision paves the way for renewed negotiations aimed at meeting the July 21, 2025 deadline that was outlined during this month’s G7 Leaders’ Summit in Kananaskis,” Carney stated in an official announcement. Carney previously convened with President Trump at the White House in May, where their discussions were characterized as cordial yet assertive. Trump subsequently traveled to Canada for the G7 summit in Alberta, where both parties concurred on a 30-day period to finalize essential components of the trade agreement.
On Friday, Trump announced via his social media platform that Canada had informed the United States of its plan to proceed with the implementation of a digital services tax. The initiative aims to address both domestic and international firms that engage with Canadian online consumers. The proposed tax, established at 3 percent, would have affected significant technology companies including Amazon, Google, Meta, Uber, and Airbnb. The design of the measure includes retroactive provisions, which could lead to American companies facing a cumulative financial obligation of around $2 billion by month’s end, as reported by the Associated Press.
The current discussions between the United States and Canada have centered on a range of tariffs that were previously instituted by Trump. Included are 50 percent duties on steel and aluminium, alongside a 25 percent levy on automotive imports. Furthermore, a 10 per cent tariff on imports from various nations continues to be in place, with the possibility of rate increases following July 9, when a 90-day negotiation period concludes. In an effort to combat fentanyl smuggling, Canada and Mexico face the imposition of additional tariffs that may reach as high as 25 percent. Nevertheless, specific goods continue to be protected under the stipulations of the 2020 United States-Mexico-Canada Agreement, which was enacted during the initial term of Trump’s presidency.
