Washington/Ottawa, June 30, 2025: The United States will resume trade negotiations with Canada after Canada decided to scrap its planned digital services tax that targeted U.S. technology companies.
The move came just hours before the tax was set to take effect. The decision clears a significant obstacle in efforts to finalize a new economic agreement between the two countries. Trade officials confirmed negotiations would restart immediately, aiming for a deal by July 21.
Canada’s finance ministry announced that legislation would be introduced to repeal the Digital Services Tax Act. The tax, proposed in 2020, would have imposed a 3% levy on revenues earned from Canadian users by large digital platforms exceeding $20 million annually. It was to be applied retroactively to 2022, impacting major U.S. technology firms.
In a statement, Canadian authorities emphasized their preference for a multilateral agreement on digital taxation and confirmed that tax collection scheduled to begin Monday would be halted.
The tax had become a sticking point in trade talks, prompting threats of new tariffs on Canadian goods and raising concerns about renewed tensions in bilateral relations.
Financial markets reacted positively, with Wall Street futures reaching record highs on optimism over progress in U.S. trade negotiations with key partners, including Canada.
Canada remains the second-largest trading partner of the United States, purchasing $349.4 billion in U.S. goods last year and exporting $412.7 billion to the U.S., according to official trade data.
