Canada has cancelled its planned 3% digital services tax on big US tech companies like Amazon, Google, and Meta. This move comes just hours before the tax was set to begin and aims to restart important trade talks with the United States.
The tax would have made US firms pay about $2 billion in back taxes on digital services used by Canadians. But after US President Donald Trump called off trade talks and threatened new tariffs, Canada decided to drop the tax. Prime Minister Mark Carney said this decision was made after a phone call with Trump and is meant to help get trade negotiations back on track before the July 21 deadline set at the recent G7 summit.
Finance Minister François-Philippe Champagne said removing the tax will allow both countries to work on a new economic and security agreement. The tax had been controversial because while Canada wanted to ensure fair taxation of digital companies, the US saw it as unfair and harmful to trade.
Political experts say Canada’s move is a clear win for the US and big tech firms. However, tariffs on Canadian steel, aluminum, and cars remain in place, so the trade relationship still faces challenges.
The talks now continue with a tight deadline, and the outcome will shape the future of North American trade.
