The strategic move to rejuvenate trade discussions with the United States, Canada announced the rescission of its proposed digital services tax. This decision comes in response to significant pressure from U.S. President Donald Trump, who previously suspended trade negotiations due to this tax . The Canadian government aims to facilitate a more conducive environment for dialogue and ultimately reach an agreement . The digital services tax was designed to target major tech companies such as Amazon and Google but faced criticism for potentially hindering bilateral trade relations.
In a statement, the Canadian government said Prime Minister Mark Carney and Trump had agreed to resume negotiations on a “mutually beneficial comprehensive trade agreement” and would aim to reach a deal by July 21. The White House did not immediately respond to a request for comment.
A planned tax that was due to take effect on Monday became a point of contention between the U.S. and Canada on Friday, when President Trump called off trade negotiations, denouncing the levy as a "blatant attack" on social media and threatening retaliatory duties within a week.
Within 48 hours, Canada conceded, announcing the Digital Services Tax would be rescinded in anticipation of a comprehensive trade agreement with the U.S. Though legislative approval is needed to formally cancel the tax, its collection is suspended in the interim, and the cancellation is expected to proceed smoothly. The White House has not yet commented.
Trump has imposed 50% tariffs on steel and aluminum as well as 25% tariffs on autos. He is also charging a 10% tax on imports from most countries, though he could raise rates on July 9, after the 90-day negotiating period he set would expire.
The repeal of the digital services tax underscores Canada's commitment to strengthening its economic ties with the U.S., especially given that the tax would have imposed substantial financial burdens on American corporations . By eliminating this contentious issue, Canada hopes to foster goodwill and encourage constructive negotiations moving forward. Finance Minister François-Philippe Champagne's announcement regarding legislation aimed at repealing the tax further indicates Canada's proactive approach in navigating complex international trade dynamics.
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