Canada has rescinded its digital services tax to advance US trade talks, which have now resumed

Canada has withdrawn its digital services tax aimed at U.S. tech companies in an effort to move forward with trade negotiations with the United States, according to a statement released Sunday by Canada’s finance ministry. The announcement follows U.S. President Donald Trump’s recent decision to halt trade discussions.

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The ministry said that Canadian Prime Minister Mark Carney and President Trump will restart negotiations with the goal of finalizing an agreement by July 21, 2025.

Last Friday, Trump unexpectedly ended trade talks with Canada, criticizing the digital tax on American technology firms as a “blatant attack.” He added that a new tariff rate on Canadian imports would be announced within the week.

The now-rescinded tax imposed a 3% levy on digital services revenue earned from Canadian users exceeding $20 million annually, with the tax set to apply retroactively from 2022.

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Canada remains the United States’ second-largest trading partner after Mexico and is the top buyer of American exports. In 2024, it purchased $349.4 billion in U.S. goods and exported $412.7 billion to the U.S., according to data from the U.S. Census Bureau.

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