Canadian Libs Cave To Trump, Drop Tech Tax

Canada rescinded its Digital Services Tax (DST) on Sunday, just before its first payments were due on Monday, to resume trade negotiations with the United States. The DST, introduced in 2020 and enacted in June 2024, imposed a 3% tax on revenues from digital services like online advertising, marketplaces, social media, and user data for companies with global revenues of €750 million or more and Canadian digital revenues exceeding CAD 20 million. 

The tax applied retroactively from 2022, targeting major U.S. tech firms like Amazon, Google, Meta, Apple, and Uber, with an estimated $2 billion USD due initially.

The decision followed U.S. President Donald Trump’s announcement on last week, to terminate all trade talks with Canada, calling the DST a “direct and blatant attack” on U.S. companies. Trump threatened new tariffs on Canadian goods within a week, citing economic leverage and also criticized Canada’s dairy tariffs, though he mischaracterized their impact, as most U.S. agricultural exports face no tariffs under the USMCA.

Canadian Finance Minister François-Philippe Champagne, who initially insisted on proceeding with the tax despite U.S. objections and G7 discussions on global tax regimes, announced the repeal to prioritize a “mutually beneficial” trade deal. Prime Minister Mark Carney and Trump agreed to resume talks, aiming for a new economic and security partnership by July 21, 2025, as set at the G7 Summit in Kananaskis.