Canada ditches its tech tax after Trump walks away from negotiating table

Canadian Prime Minister Mark Carney announced his country would scrap a tax on American technology companies “in anticipation” of a trade deal with the U.S.

The move, announced Sunday by Carney, comes after President Donald Trump announced Friday that he would suspend all trade talks with Canada over its decision to impose a tax on technology firms, which he called “a direct and blatant attack on our country.”

However, the Canadian government folded “in anticipation” of a trade deal with the U.S. and rescinded the digital services tax.

The digital services tax, which had been in place since last year, would have slapped a 3 percent levy on domestic and foreign tech companies, including Google, Meta, Uber and Amazon. As the tax would have applied retroactively, it would leave American companies with a $2 billion bill at the end of the month.

Carney and Trump spoke on the phone Sunday, and the Canadian leader’s office said they agreed to resume trade talks.

“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 said in a statement.

Carney said the cancellation of the tax would put trade talks back on track to reach an agreement by July 21, though in a statement, Canada’s finance ministry said that Canada “will take as long as necessary, but no longer, to achieve that deal.”

According to the U.S. Trade Representative’s office, U.S. goods trade with Canada totaled roughly $762 billion last year, making Canada one of the country’s two largest trading partners.

Trump’s announcement Friday comes amidst the president’s ongoing, and self-inflicted, trade war.

Both Canada and Mexico are facing tariffs as much as 25 percent on most products, in addition to a 50 percent tariff on steel and aluminum.

Trump is also charging a 10 percent tax on imports from most countries, which could be raised further on July 9, following a 90-day negotiating period.

A three-judge panel of the U.S. Court for International Trade had previously ruled that Trump’s use of tariffs for such purposes was illegal, but that ruling is on hold pending an appeal.

With reporting from the Associated Press.