Canada Rescinds Digital Services Tax Targeting U.S. Tech Firms After Pressure from Trump

Canada has agreed to rescind its digital services tax targeting U.S. technology firms following pressure from President Donald Trump, ending a dispute that had stalled trade negotiations between the two countries. 

The decision marks a major concession from Ottawa, which had previously vowed to uphold the policy despite objections from Washington.

The tax, implemented in June, levied a 3 percent fee on revenue earned by large digital platforms operating in Canada, including U.S. companies like Apple and Google. 

The excise was applied retroactively and was expected to cost American firms over $2 billion annually. 

Canada’s reversal includes a promise not to collect payments originally due on June 30.

In a statement released Sunday, Canadian officials confirmed the withdrawal of the tax in anticipation of renewed trade discussions. 

“Rescinding the digital services tax will allow the negotiations of a new economic and security relationship with the United States to make vital progress and reinforce our work to create jobs and build prosperity for all Canadians,” said Canadian Minister of Finance and National Revenue Francois-Philippe Champagne.

The announcement followed President Trump’s decision to suspend trade talks with Canadian Prime Minister Mark Carney. 

Resist the Mainstream previously reported that the president called the tax a “direct and blatant attack on our Country” and warned that, if it remained in place, retaliatory tariffs on Canadian imports would follow.

Canada’s Department of Finance confirmed that both sides have now agreed to resume discussions and aim to finalize a new trade deal by July 21. 

The previous breakdown in negotiations had been directly linked to Ottawa’s refusal to eliminate the digital services tax.

Earlier this month, Champagne defended the tax in public remarks, asserting that it would proceed despite U.S. resistance. 

“The [digital services tax] is in force and it’s going to be applied,” he said during a press event before a Canadian Cabinet meeting.

Trump administration officials had expressed strong opposition to the policy from the outset. 

Treasury Secretary Scott Bessent criticized the tax during an interview on CNBC on Friday, announcing that U.S. Trade Representative Jamieson Greer would initiate a review to determine “the amount of harm to the U.S. companies and the U.S. economy in general.”

“We disagree [with the tax], and we think that they discriminate against U.S. companies,” Bessent said, according to the Washington Examiner.

He noted that while some European Union nations also impose digital services taxes, none have applied them retroactively.

He noted that while some European Union nations also impose digital services taxes, none have applied them retroactively.

The Canadian tax had specifically applied to tech companies earning more than $20 million in revenue from user interaction in the country.

Its rollback is expected to ease tensions between the two governments and facilitate a broader agreement addressing trade, security, and economic policy.

With the measure rescinded, officials from both nations are preparing for a new round of talks in the coming weeks aimed at reaching a bilateral deal before the end of July.

The post Canada Rescinds Digital Services Tax Targeting U.S. Tech Firms After Pressure from Trump appeared first on Resist the Mainstream.