Canada scraps tech tax to advance trade talks with Donald Trump

Open the newsletter to watch the White House for free

Your guide to what the second period of Trump means to Washington, business and the world

Canada canceled the digital services tax targeting American technology companies, in an attempt to soften commercial negotiations with its neighbor after President Donald Trump described the tax as a “direct and strict” attack.

The decision to abandon the tax was a tax of 3 percent on the revenue of the largest technology companies, hours before the start of the effect on June 30.

Canadian Finance Minister François Philip said in a statement on Sunday night.

Prime Minister Mark Carney said that the tax reduction “will support the resumption of negotiations towards the July 21st schedule” announced at the Group of Group Leaders’ summit for this month in Kananascis, Alberta.

The statement said that Carney and Trump agreed to resume negotiations. Trump said on Friday that the United States “ending” trade talks with Canada in response to the tax on technology companies, and distorting a bitter trade war in North America after months of disposal.

Trump reiterated these complaints on Fox News on Sunday. “Until time, they are dropping some taxes, yes,” he said. “People do not realize, Canada is very bad to deal with it.”

In December 2023, the Parliamentary Budget Office in Canada estimated that Destin will increase the revenue of the federal government by $ 7.2 billion ($ 5.3 billion) over a period of five years.

The tax, which was first announced in 2020, targeted companies like Meta, Netflix and Amazon as well as local companies. The affected had to provide a return by the end of June or a fine confrontation.

Although the tax was one of Trump’s main complaints, it was also unpopular with some Canadian business groups.

“For many years, we warned that the implementation of the one -sided digital services tax may risk undermining the economic relationship of Canada with [the US]Goldi Haider, Chairman of the Business Council in Canada, said.

Trump’s unprecedented runner dominated his northern neighbor – with repeated threats to the Canadian Attaché and imposing definitions in a violation of the free trade agreement – on the Canadian elections and helped pushing the liberal Carney party to victory.

Carney pledged to stand in the face of Trump, and last week, Finance Minister said that Ottawa would advance the tax.

Carney also announced this month a significant increase in defensive spending in Canada, which enabled her to achieve the goal of NATO represented by at least 2 percent of GDP annually this year instead of 2030. This is after criticizing Trump that he and other NATO members did not raise their weight.

Canada has an annual trading relationship with the United States of $ 1.3 trillion and sells most of its products and services to the United States.

Carney launched a sweeping set of reforms to diversify the economy from the United States strongly, including a boost to drop the internal commercial barriers that prevented the flow of goods and services between Canadian provinces.