OTTAWA/WASHINGTON: In a significant turnaround, Canada announced the withdrawal of its controversial agreement Digital Services Tax (DST) just a few days later US President Donald Trump suspended in progress commercial negotiations to protest against the levy. The decision aims to ease diplomatic tensions and pave the way for the resumption of negotiations before the July 21, 2025 timetable agreed upon G7 Leaders Summit in Kananaskis earlier this month.
Prime Minister Marc Carneyin an official statement on Sunday, confirmed that Canada and the United States had agreed to relaunch commercial discussionswhich was abruptly interrupted Friday by President Trump due to what he called a “direct and blatant attack on our country”.
“Today’s announcement will support the resumption of negotiations by July 21, 2025,” said Mr. Carney, emphasizing the importance of maintaining a constructive dialogue with Canada’s largest trading partner.
Background: What was Daylight Saving Time?
The Canadian DST, initially passed into law in 2024, proposed a 3% tax on the national digital revenues large multinational companies, particularly targeting online marketplaces, social media companies, digital advertising platforms and companies monetizing user data. The levy applied to companies earning more 20 million CAD ($14.6 million) in Canadian revenue each year and was should be collected retroactively from 2022.
Although intended for eliminate tax loopholes which has enabled tech giants such as Apple, Amazon, Meta and Alphabet/Google In order to minimize their Canadian tax obligations, the measure quickly aroused the ire of the White House.
Trump’s reaction and pressure tactics
In his Truth Social article published Friday, Trump accused Canada of unfairly targeting American companies and announced a total suspension of trade negotiations with Ottawa. He further warned that retaliation prices would be announced within a week.
Trump’s decision marked a sharp escalation of his administration’s protectionist stance, similar to previous trade spats with allies during his previous term. Observers noted the broader implications for U.S. Relations with G7 Partnersespecially since France, United Kingdom and Italy have also implemented similar digital taxes.
Domestic criticism in Canada
The Canadian government’s about-face has sparked criticism at home. Paris Marxa prominent Canadian technology journalist, said the decision sends the message that “Canada can be shaken up. »
“Multinational technology companies are not paying their fair share of taxes in Canada. This tax was designed to solve this problem, and moving backward shows weakness,” Marx said.
“The United States blocked a global solution under Biden and Trump, and countries like Canada had no choice but to act unilaterally. »
Response from the Ministry of Finance
In a press release, Canada Ministry of Finance confirmed that the DST collection will be stopped immediatelyand legislation to formally repeal the Digital Services Tax Act will be filed soon by Finance Minister François-Philippe Champagne.
The department reiterated that Canada “the preference remains a multilateral agreement» through the Organization for Economic Co-operation and Development (OECD) framework, but acknowledged that progress in this area has been blocked.
Commercial and economic context
Canada is the The second largest trading partner of the United Stateswith bilateral trade reaching nearly 762 billion dollars in 2024. Although he was spared from Trump’s earlier Price package April 2025Canada still faces 50% tariffs on steel and aluminum.
Analysts now see resumption of trade negotiations between the United States and Canada also critical for the Agreement deadline of July 21especially with North American economic integration And supply chain coordination at the top of the agenda before North American Competitiveness Summit 2026.
