Canada Scraps Tax on US Tech Firms to Salvage Trade Talks

Canada said that it is rescinding its digital services tax that would have targeted U.S. technology firms, in a bid to restart trade talks between Washington and Ottawa.

U.S. President Donald Trump paused trade talks on Friday over Canada’s adoption of the 3% tax on technology companies’ revenue from providing digital services to domestic users. Collection of the tax was slated to begin Monday.

“To support those negotiations, the Minister of Finance and National Revenue, the Honourable François-Philippe Champagne, announced today that Canada would rescind the Digital Services Tax (DST) in anticipation of a mutually beneficial comprehensive trade arrangement with the United States,” Canada’s finance ministry said Sunday.

Canadian Prime Minister Mark Carney said rescinding the tax would “support a resumption of negotiations toward the July 21, 2025, timeline set out at this month’s G7 Leaders’ Summit in Kananaskis.”

Digital taxes also have been a sticking point in trade talks between the U.S. and the European Union.