Canada resumes trade talks with US following suspension of tech tax plan

Canada withdraws digital tax on US tech firms, prompting resumption of trade talks with Washington; Mark Carney, Donald Trump aim to meet July 21 deadline set during G7 Summit in Kananaskis

Trade talks between Canada and the United States are back on track following Canada’s decision to withdraw its proposed digital services tax targeting American technology companies, Canadian Prime Minister Mark Carney said on Monday. 

This development follows US President Donald Trump’s decision on Friday (June 27) to halt discussions, criticising Canada’s digital tax plan as “a direct and blatant attack on our country”. 

The Canadian government confirmed it would cancel the implementation of the Digital Services Tax, which had been scheduled to take effect Monday, citing the move as a gesture made “in anticipation” of securing a broader trade agreement, Associated Press reported. 

 

According to Carney’s office, both leaders have now agreed to move forward with talks. “This decision paves the way for renewed negotiations aimed at meeting the July 21, 2025 deadline that was outlined during this month’s G7 Leaders’ Summit in Kananaskis,” Carney said in an official statement. 

Carney previously met with President Trump at the White House in May, where their discussions were described as cordial but assertive. Trump later visited Canada for the G7 summit in Alberta, where both sides agreed to a 30-day timeframe to finalise key aspects of the trade deal.

 

Digital tax draws US ire

Trump, in a post on his social media platform on Friday said that Canada had notified the United States of its intention to move forward with implementing a digital services tax. The measure would target both domestic and international companies that interact with Canadian online users. 

The proposed tax, set at 3 per cent, would have impacted major tech firms such as Amazon, Google, Meta, Uber, and Airbnb. It was also designed to be retroactive, potentially resulting in American companies receiving a combined bill of approximately $2 billion by the end of the month, Associated Press reported.

 

Tariffs remain a point of contention

Ongoing negotiations between the US and Canada have also focused on a series of tariffs Trump previously imposed. These include 50 per cent duties on steel and aluminium and a 25 per cent levy on automotive imports. Additionally, a 10 per cent tariff on imports from several countries remains in effect, with the potential for rate hikes after July 9, once a 90-day negotiation window ends. 

Under measures aimed at curbing fentanyl smuggling, Canada and Mexico are also subject to additional tariffs of up to 25 per cent. However, certain goods remain shielded by provisions in the 2020 United States-Mexico-Canada Agreement, which was signed during Trump’s first presidential term.