Canada plans to reinitiate trade negotiations with the U.S., following the revocation of its digital services tax.
In a significant move aimed at strengthening bilateral trade relations, Canada has rescinded its Digital Services Tax (DST) targeting U.S. technology firms, paving the way for the resumption of trade negotiations with the U.S. This decision was made on June 30, 2025, just before the first payment on the tax was due.
The DST conflict had put pressure on the previously paused trade discussions, with U.S. President Donald Trump announcing a complete halt in trade discussions and threatening new tariffs in response to the tax. However, the rescinding of the DST has brought about a positive momentum towards a comprehensive trade agreement.
The U.S. and Trump have agreed to resume trade talks, with the aim of finalizing a mutually beneficial arrangement by July 21, 2025. This timeline was agreed upon at the recent G7 Summit. The U.S. tariffs on Canada have been paused and reduced to 10%, and no new tariffs have been announced following the cancellation of the DST.
The U.S. is Canada's largest trading partner, while Canada is the largest importer of American exports and one of the top three sources of U.S. imports. The rescinded DST required large businesses to pay a 3% tax on revenue earned from engaging with online users in Canada.
The breakdown in trade talks followed the leaders' G7 meeting earlier this month. It is important to note that while the U.S. has inked a trade deal with the UK, no information has been provided about Trump's upcoming trade negotiations with China.
This development reflects a significant thaw in bilateral trade relations, with both sides seeking to avoid tariff conflicts and promote closer economic cooperation. The collection of the Digital Services Tax will remain halted, and legislation is pending to rescind the Digital Services Tax Act.
[1] CBC News. (2025). Canada scraps digital services tax to restart trade talks with U.S. [online] Available at:
- The rescinding of Canada's Digital Services Tax (DST) has opened up opportunities for trading in the technology industry, as it paves the way for resumption of trade negotiations with the U.S. (CBC News)
- The decision to rescind the DST affects the finance sector, as large businesses no longer have to pay a 3% tax on their revenue earned from engaging with online users in Canada. (Bloomberg)
- The matter of the DST and its removal has significant implications for the economy, as it will likely influence future investment decisions in the digital services sector. (Reuters)
- The political landscape has seen a shift due to the resumption of trade talks between the U.S. and Canada, following the reversal of the DST. (The Globe and Mail)
- This development in bilateral trade relations is of general news interest, as it highlights the importance of diplomacy in maintaining a vibrant business and finance environment. (Financial Post)
