By [Luminposts], June 30, 2025
Canada has scrapped its planned digital services tax targeting U.S. technology firms, a move announced late Sunday, just hours before the tax was set to take effect. The decision aims to advance stalled trade negotiations with the United States, Canada’s finance ministry said in a statement.
The two nations will resume trade talks to reach a deal by July 21, 2025. The tax, which prompted U.S. President Donald Trump to abruptly halt negotiations on Friday, was labelled a “blatant attack” on American companies. Trump reiterated his stance Sunday, vowing to set new tariff rates on Canadian goods within the next week.
The proposed 3% tax targets digital services revenue above $20 million annually from Canadian users, applying retroactively to 2022. It would have affected major U.S. tech firms like Amazon, Meta, Google, and Apple.
Canada’s decision follows Trump’s threat to disrupt U.S.-Canada relations, which had been relatively calm. Canada, the second-largest U.S. trading partner after Mexico, purchased $349 billion in U.S. goods last year and exported $412 billion to the U.S., according to trade data.
The move to rescind the tax signals Canada’s push to avoid trade chaos and secure a new agreement with its largest export market.
Sources: Canada.ca, Reuters, CNBC
