Canadian Prime Minister Mark Carney announced on Sunday that trade discussions with the United States have resumed following Canada’s decision to withdraw its plan to impose a tax on U.S. technology companies.
This development comes after President Donald Trump declared on Friday that he was halting trade negotiations with Canada due to the country’s commitment to implement a digital services tax, which he labeled a “direct and blatant attack on our country.”
In a statement, the Canadian government indicated that the decision to revoke the digital services tax was made in anticipation of a trade agreement, which was scheduled to take effect Monday.
Following a telephone conversation between Carney and Trump on Sunday, Carney’s office confirmed that both leaders reached an understanding to continue negotiations.
“Today’s announcement will support a resumption of negotiations toward the July 21, 2025, timeline set out at this month’s G7 Leaders’ Summit in Kananaskis,” Carney stated.
On Monday, White House Press Secretary Karoline Leavitt addressed how Trump influenced Carney’s decision to abandon the tech tax.
“It’s very simple. Prime Minister Carney in Canada caved to President Trump and the United States of America,” Leavitt declared, emphasizing that Trump is adept at negotiation and recognizes the U.S. as the leading economy in the world.
Leavitt further asserted that every nation should aspire to maintain strong trade relations with the United States, and characterized Canada’s promise to impose the tax as a misstep that would have adversely impacted American tech companies.
During their phone conversation, Carney communicated to Trump that Canada would withdraw the tax, which Leavitt described as a significant victory for U.S. technology firms and American employees.
The two leaders had previously met in May at the White House, where Carney maintained a polite yet resolute stance.
Trump attended the G7 summit in Kananaskis, Alberta, where Carney mentioned a 30-day deadline was established for ongoing trade discussions between the two countries.
Trump, in a post on his social media platform last Friday, stated that Canada had reaffirmed its intention to go ahead with the digital services tax, targeting domestic and foreign businesses that engage with Canadian customers online.
This tax would have imposed a 3% levy on revenue accrued from Canadian users on companies such as Amazon, Google, Meta, Uber, and Airbnb, and was set to apply retroactively, potentially costing U.S. companies up to $2 billion by the end of the month.
Daniel Béland, a political science professor at McGill University, regarded Carney’s decision as a “clear victory” for Trump.
He noted that Carney’s move may have been strategically necessary within the framework of Canada-U.S. trade negotiations, but it portrayed the Prime Minister as yielding to Trump’s demands, ultimately benefiting the White House and the technology sector.
Béland expressed that Carney appeared vulnerable to Trump’s pressure, pointing out that the former U.S. president successfully compelled the Canadian Prime Minister to act in accordance with the wishes of leading tech companies.
Canadian Finance Minister Francois-Philippe Champagne supported the decision, stating after a conversation with U.S. Treasury Secretary Scott Bessent that rescinding the digital services tax would facilitate the negotiation of a new economic and security partnership with the United States.
Trump’s declaration on Friday marked another twist in the trade conflict he has orchestrated since taking office for a second term earlier this year, with trade relations between Canada and the U.S. resembling a roller coaster ride.
Trump has previously referred to Canada in a confrontational manner, even implying that Canada could eventually integrate as a U.S. state.
Both countries have been discussing proposals to alleviate a series of tariffs that Trump instituted against Canadian goods.
These tariffs include a 50% levy on steel and aluminum as well as a 25% tariff on automotive imports. Additionally, a 10% tax on imports from most countries is currently in effect, with the potential for rate increases occurring after the 90-day negotiation period concludes on July 9.
Canada and Mexico are facing separate tariffs that could reach 25%, implemented under the pretext of combating fentanyl trafficking, even as some products remain safeguarded by the terms of the 2020 U.S.-Mexico-Canada Agreement ratified during Trump’s first term.
image source from：latimes
