TORONTO (AP) — Canadian Prime Minister Mark Carney announced late Sunday that trade negotiations with the United States have resumed after Canada reversed its plan to impose a tax on U.S. technology firms.
U.S. President Donald Trump had declared on Friday that he was suspending trade talks with Canada in response to their proposed digital services tax, which he characterized as “a direct and blatant attack on our country.”
The Canadian government stated that “in anticipation” of a trade agreement, “Canada would rescind” the Digital Services Tax. The tax was originally scheduled to take effect on Monday.
Carney and Trump held a phone conversation on Sunday, and Carney’s office reported that they agreed to resume negotiations.
“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,” Carney said in a statement.
Carney had previously visited Trump at the White House in May, maintaining a polite but firm stance. Trump later traveled to Canada for the G7 summit in Alberta, where Carney indicated that Canada and the U.S. had established a 30-day deadline for trade discussions.
The digital services tax was designed to levy a 3% tax on revenue generated from Canadian users by companies such as Amazon, Google, Meta, Uber, and Airbnb. It would have been applied retroactively, resulting in a $2 billion USD bill for U.S. companies due at the end of the month.
Daniel Béland, a political science professor at McGill University in Montreal, described Carney’s reversal as “a clear victory” for Trump.
“At some point, this move might have become necessary within the context of Canada-US trade negotiations themselves, but Prime Minister Carney acted now to appease President Trump and have him agree to simply resume these negotiations, which is a clear victory for both the White House and big tech,” Béland stated.
He suggested that this decision makes Carney appear vulnerable to President Trump’s strong-arm tactics.
“President Trump forced PM Carney to do exactly what big tech wanted. U.S. tech executives will be very happy with this outcome,” Béland added.
Canadian Finance Minister François-Philippe Champagne also engaged in discussions with U.S. Treasury Secretary Scott Bessent on Sunday.
“Rescinding the digital services tax will allow the negotiations of a new economic and security relationship with the United States to make vital progress,” Canadian Finance Minister François-Philippe Champagne affirmed in a statement.
Trump’s announcement on Friday marks the latest shift in the trade war he initiated since beginning his second term in January. Progress with Canada has been inconsistent, with the U.S. president frequently targeting the northern neighbor and suggesting its potential absorption into the U.S.
Canada and the U.S. have been engaged in discussions to ease a series of significant tariffs imposed by Trump on goods from Canada.
Trump has implemented 50% tariffs on steel and aluminum, as well as 25% tariffs on automobiles. He is also applying a 10% tax on imports from most countries, with the potential to increase rates on July 9, following the expiration of the 90-day negotiating period he established.
Canada and Mexico face separate tariffs of up to 25% implemented by Trump under the rationale of curbing fentanyl smuggling, although some products remain protected under the 2020 U.S.-Mexico-Canada Agreement signed during Trump’s first term.
