Canada Caves Trump's Fury Kills Digital Tax!

Canada Abruptly Scraps Digital Services Tax Targeting US Technology Firms After Trump's Outburst

In a dramatic turn of events, Canada has shelved its plans to implement a digital services tax (DST) targeting major US technology companies. This decision comes just days after former President Donald Trump vehemently criticized the proposed levy, branding it a "foolish" move and a "direct and blatant attack" on the United States.

The announcement, made by Canadian Prime Minister Mark Carney, arrived mere hours before the tax was scheduled to take effect on Monday. The move is widely seen as an attempt to salvage stalled trade negotiations between the two countries, with a critical deadline looming on July 21.

The Backstory: A Tax, Trump's Fury, and Stalled Talks

The proposed 3% tax on revenue earned from Canadian users was set to impact tech giants such as Amazon, Google, Meta, Uber, and Airbnb. The tax would have been applied retroactively, potentially burdening these companies with an estimated $2 billion bill due by the end of the month.

Trump, known for his assertive stance on trade, reacted swiftly and strongly. He announced the immediate termination of all trade discussions with Canada, vowing to impose new tariffs on Canadian goods within a week. "We will let Canada know the Tariff that they will be paying to do business with the United States of America within the next seven-day period," he declared on Truth Social.

Key Highlights of the Situation:

• Trump's Strong Reaction: Trump labeled the tax a "direct and blatant attack" and threatened retaliatory tariffs.
• Trade Talks Halted: The US abruptly ended trade negotiations with Canada.
• Retroactive Impact: The tax would have been applied retroactively, resulting in a significant bill for US tech firms.
• Carney's Intervention: Prime Minister Carney reportedly spoke with Trump on Sunday night, leading to the decision to halt the tax.

The Rationale Behind the Tax

Canada's finance ministry explained that the DST was initially proposed in 2020 to address the fact that many large technology companies operating in Canada might not be paying taxes commensurate with the revenue they generate from Canadian users.

Moving Forward: A Multilateral Solution?

The Canadian government has expressed its preference for a multilateral agreement on digital services taxation. Finance Minister François-Philippe Champagne is expected to introduce legislation to formally rescind the tax.

Looking Ahead

The abrupt reversal underscores the delicate balance in US-Canada relations and the significant economic leverage the United States holds. While the immediate threat of retaliatory tariffs has been averted, the incident highlights the need for a more stable and predictable framework for digital taxation that avoids unilateral measures and fosters international cooperation. The resumption of trade talks offers a glimmer of hope for resolving these complex issues and strengthening the economic ties between these two vital partners.

Tags: Canada, digital tax, Trump, trade talks, US, Mark Carney, tech firms, Amazon, Google, Meta, international trade

Source: https://nypost.com/2025/06/30/us-news/canada-rescinds-digital-services-tax-targeting-us-technology-firms-to-advance-stalled-trade-talks/