TORONTO — Following significant tensions regarding trade, Canadian Prime Minister Mark Carney announced late Sunday that trade discussions with the United States have resumed after Canada decided to withdraw its plans for a tax on U.S. technology companies.
This decision comes in the wake of U.S. President Donald Trump’s suspension of trade negotiations over Canada’s intention to impose the Digital Services Tax, which he labeled as a ‘direct and blatant attack on our country.’
In a proactive move towards securing a trade agreement, the Canadian government indicated that it would rescind the Digital Services Tax, originally scheduled to take effect the following day.
Prime Minister Carney and President Trump held a phone conversation on Sunday where they mutually agreed to restart 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 in an official release.
The backdrop to these negotiations is notable; Carney had previously visited Trump at the White House in May, where the discussions were characterized as polite yet firm.
After Trump’s visit to Canada for the G7 summit in Alberta, both leaders set a 30-day deadline for the trade talks, highlighting the urgency of resolving the outstanding issues.
Last Friday, President Trump took to his social media platform to convey that Canada had confirmed it would go through with the Digital Services Tax, which was designed to affect both Canadian and foreign companies that interact with online users in the country.
The Digital Services Tax, which targeted major companies such as Amazon, Google, Meta, Uber, and Airbnb, included a levy of 3% on revenues generated from Canadian consumers.
Were it to be enacted, the tax would have applied retroactively, resulting in an estimated $2 billion U.S. bill for U.S. firms by the close of the month.
Political science professor Daniel Béland from McGill University remarked that Carney’s decision to withdraw the tax indicates a significant victory for President Trump.
‘At some point, this move might have become necessary in the context of Canada-U.S. trade negotiations themselves but Prime Minister Carney acted now to appease President Trump and have him agree to simply resume these negotiations, which is a clear victory for both the White House and big tech,’ Béland noted.
He further pointed out that this situation positions Carney as somewhat vulnerable to the fluctuations of Trump’s presidency.
‘President Trump forced PM Carney to do exactly what big tech wanted. U.S. tech executives will be very happy with this outcome,’ he added.
Additionally, Canadian Finance Minister François-Philippe Champagne communicated with U.S. Treasury Secretary Scott Bessent, stating, ‘Rescinding the digital services tax will allow the negotiations of a new economic and security relationship with the United States to make vital progress.’
Trump’s Friday announcement is the latest twist in the ongoing trade war initiated during his second term since January.
The negotiations with Canada have been marked by volatility, with Trump previously suggesting the possibility of Canada becoming a U.S. state.
Ongoing discussions include the potential easing of steep tariffs that Trump imposed on goods from Canada, including 50% tariffs on steel and aluminum and 25% tariffs on automobiles.
Furthermore, Trump is enforcing a 10% tax on imports from various countries, but could potentially increase rates following the expiration of a 90-day negotiating period on July 9.
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