(LifeSiteNews) – The Canadian government scrambled to rescind its newly enacted digital services tax and resume trade negotiations with the United States just days after U.S. President Donald Trump abruptly halted them.
As LifeSiteNews covered on Friday, effective June 28, Canada’s digital services tax began imposing a 3% tax on revenue from “(c)ertain digital services that rely on engagement, data, and content contributions of Canadian users” and “(c)ertain sales or licensing of Canadian user data.” Most critically to American trade partners, it would apply retroactively, hitting U.S. companies with sudden, significant new expenses at the end of June.
In response, Trump took to Truth Social to declare, “We have just been informed that Canada, a very difficult Country to TRADE with, including the fact that they have charged our Farmers as much as 400% Tariffs, for years, on Dairy Products, has just announced that they are putting a Digital Services Tax on our American Technology Companies, which is a direct and blatant attack on our Country.”
“They are obviously copying the European Union, which has done the same thing, and is currently under discussion with us, also,” the president continued. “Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately. We will let Canada know the Tariff that they will be paying to do business with the United States of America within the next seven day period. Thank you for your attention to this matter!”
On Sunday, however, Fox Business reported that the Canadian Department of Finance announced that collection of the new tax would not be enforced on June 30, and that full repeal legislation is currently pending “in anticipation of a mutually beneficial comprehensive trade arrangement with the United States.”
“Consistent with this action, Prime Minister Carney and President Trump have agreed that parties will resume negotiations with a view towards agreeing on a deal by July 21, 2025,” it said, just a few days later than the originally anticipated July 16 deadline.
“This tax would have fallen on Canadian consumers, businesses, and investors in the form of higher costs and hurt our economy at a critical time,” David Pierce, vice president of government relations at the Canadian Chamber of Commerce, said, according to a Bloomberg report. “And removing it moves us one step closer to a renewed, reliable trade deal with the U.S. Administration.”
The Trump administration has not yet commented on its northern neighbor’s capitulation.
The United States currently imposes a 25% tariff on goods deemed not compliant with the United States-Mexico-Canada Agreement (USMCA), the trade agreement Trump negotiated in his first term to replace NAFTA; a 10% tariff on USMCA non-compliant energy products; and a 10% tariff on USMCA non-compliant potash.
The tariffs on Canada are part of the Trump administration’s broader series of varying tariffs on most other nations (which have been adjusted, lifted, and delayed at various points over the past several months). Supporters say the trade war is necessary to make international trade fairer and spur a return of domestic manufacturing; opponents argue they increase costs on American consumers and small businesses.
