Canada rescinds digital services tax after Trump cuts off trade talks

Canada has walked back on its digital services tax “in anticipation” of a mutually beneficial comprehensive trade arrangement with the United States, Ottawa announced Sunday night, just one day before the first tax payments were due

Canada has walked back on its digital services tax “in anticipation” of a mutually beneficial comprehensive trade arrangement with the United States, Ottawa announced Sunday night, just one day before the first tax payments were due.

The move comes after U.S. President Donald Trump announced over the weekend that he will be “terminating ALL discussions on Trade with Canada” in response to Ottawa’s decision to impose a digital services tax on American tech firms.

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

Canadian Prime Minister Mark Carney and President Donald Trump pose for a family photo during the Group of Seven (G7) Summit at the Kananaskis Country Golf Course in Kananaskis, Alberta, Canada on June 16, 2025. Brendan Smialowski / AFP via Getty ImagesThe first payments from Canada’s digital services tax, which was enacted last year and applies retroactively to 2022, were initially set to be collected Monday. The tax would have applied to both domestic and foreign tech companies, including U.S. giants such as Amazon, Google and Meta with a 3% levy.

This decision from Ottawa was an about-turn from Canadian officials earlier this month, who said they would not pause the digital services tax, despite strong opposition from the U.S.