Canada resumes trade talks with US after rescinding tax on tech firms
Canada announced the resumption of trade negotiations with the United States and the cancellation of its tax targeting US tech firms, a move that had previously led President Donald Trump to abruptly suspend talks.
Ottawa introduced the digital services tax last year, projected to generate 5.9 billion Canadian dollars over five years. Though not a new measure, the US Computer & Communications Industry Association (CCIA) recently warned that the tax would have imposed billions of dollars in costs on American service providers operating in Canada by June 30.
Washington had requested negotiations to resolve the dispute. However, Trump announced Friday the immediate termination of trade talks with Canada in response to the tax, stating that Ottawa would learn of the tariff rate imposed on it “within the week.”
In a statement, Canadian Finance Minister François-Philippe Champagne said Trump and Canadian Prime Minister Mark Carney had agreed to resume negotiations with the goal of reaching a deal by July 21, 2025.
“Canada will rescind the digital services tax in anticipation of a mutually beneficial comprehensive trade arrangement with the United States,” Champagne added.
The White House and President Trump have not yet issued any official comment.
Earlier Friday, US Treasury Secretary Scott Bessent told CNBC that Washington hoped Canada would suspend the tax as a gesture of “goodwill.”
Trump’s move to terminate trade talks came amid rising tensions over the 3% digital services tax, which targets large multinational firms such as Alphabet, Amazon, and Meta that provide digital services to Canadian users.
“Stabilizing Relations”
While Canada had been exempt from some of the broader tariffs imposed by Trump on other countries, it remains subject to a separate set of trade duties.
Since returning to the White House in January, Trump has imposed steep tariffs on steel, aluminum, and automobile imports. Canada is one of the largest exporters of steel and aluminum to the United States.
On June 19, Carney said Canada would “adjust” its 25% retaliatory tariffs on US steel and aluminum if no agreement is reached within 30 days.
On Friday, the Canadian prime minister reaffirmed the government’s commitment to “continue to conduct these complex negotiations in the best interest of Canadians.”
Carney previously said a successful outcome would mean to “stabilize the trading relationship with the United States,” ensuring “ready access to US markets for Canadian companies,” while also “not having our hands tied in terms of our dealings with the rest of the world.”
Trump and Carney met earlier in June on the sidelines of the G7 Summit hosted by Canada, where G7 leaders urged the US president to de-escalate trade tensions with key partners.
Dozens of countries are watching the July 9 deadline, when Trump’s newly approved additional tariffs are set to take effect, on top of the current 10% duty, unless new deals are reached beforehand.
