Canada has abandoned its digital services tax targeting U.S. tech giants just before its implementation, aiming to salvage stalled trade talks with Washington. The move follows threats from President Donald Trump, who called the tax a “blatant attack” and warned of retaliatory tariffs
Canada has withdrawn its digital services tax (DST) on U.S. technology companies just hours before it was set to take effect, in an effort to restart stalled trade negotiations with the United States.
Prime Minister Mark Carney and U.S. President Donald Trump will resume talks to finalize a trade deal by July 21, Canada’s finance ministry announced late Sunday. The decision came after Trump abruptly halted negotiations on Friday, condemning the tax as a “blatant attack” and threatening new tariffs on Canadian goods.
“The DST was announced in 2020 to address the fact that many large technology companies operating in Canada may not otherwise pay tax on revenues generated from Canadians,” the ministry said in a statement. “Canada’s preference has always been a multilateral agreement related to digital services taxation.”
The 3% levy would have applied to digital revenues exceeding $20 million annually from Canadian users, retroactive to 2022, affecting firms like Amazon, Meta, Google, and Apple.
Finance Minister François-Philippe Champagne will introduce legislation to repeal the tax, with Monday’s collection now halted. The move seeks to ease tensions after Trump’s renewed tariff threats risked derailing months of diplomatic progress.