Carney, Trump Agree to Resume Trade Talks After Tax Reversal
Canada rescinds tech tax: Prime Minister Mark Carney announced Sunday that Canada will drop its digital services tax, prompting the U.S. to resume trade talks after Trump suspended negotiations over what he called a “blatant attack.”
Canada’s Digital Tax: A $2 Billion Dispute
Set to go into effect on July 1, 2025, the Digital Services Tax (DST) would have imposed a 3% levy on revenue generated by foreign and domestic tech giants like Google, Amazon, Meta, Uber, and Airbnb. The tax was to be retroactive, resulting in a $2 billion bill for U.S. firms.
Facing mounting pressure and the threat of further tariffs, Canada agreed to rescind the tax “in anticipation” of a trade deal.
A 30-Day Deadline from the G7
Carney and Trump spoke on the phone Sunday, aligning with the July 21, 2025 deadline set at the G7 Summit in Alberta. “Today’s announcement will support a resumption of negotiations,” Carney said in a statement following the call.
Canadian Finance Minister François-Philippe Champagne echoed that sentiment, saying rescinding the DST “allows negotiations of a new economic and security relationship with the U.S. to make vital progress.”
U.S. Pressure Works in Favor of Big Tech
According to McGill University’s Daniel Béland, this marks a “clear victory for Trump” and U.S. tech firms. “Carney acted now to appease President Trump… U.S. tech executives will be very happy,” Béland said, adding that the move makes Carney appear vulnerable to U.S. pressure.
Trump’s Tariff War Isn’t Over Yet
Since returning to the White House in January 2025, Trump has reimposed steep tariffs:
- 50% on steel and aluminum
- 25% on autos
- 10% blanket import tax, set to rise on July 9 after a 90-day review
- 25% fentanyl-related tariffs on Mexico and Canada
While Canada-Mexico agreements from 2020 (USMCA) offer some trade protection, both nations remain locked in tense negotiations.
Source: AP News