Canada gives in to Trump's pressure and eliminates the tax on digital services against US companies

Just hours before it was set to take effect, Canada canceled its digital services tax targeting U.S. technology companies. The decision was confirmed in a statement released late Sunday night by the Canadian Department of Finance and the Canada Revenue Agency, currently led by François-Philippe Champagne.

The tax had been a point of contention between the Trump administration and the government of Prime Minister Mark Carney. In fact, on July 27, in response to the proposed tax, Donald Trump announced that he would end trade negotiations with Canada and assign a new tariff rate to its products.

The Canadian statement noted that the two countries will continue their "complex negotiations" in the coming days, with a focus on establishing "a new economic and security partnership with the United States, focused on getting the best deal for Canadian workers and businesses."

"To support those negotiations, the Minister of Finance and National Revenue, the Honourable François-Philippe Champagne, announced today that Canada would rescind the Digital Services Tax (DST) in anticipation of a mutually beneficial comprehensive trade arrangement with the United States. Consistent with this action, Prime Minister Carney and President Trump have agreed that parties will resume negotiations with a view towards agreeing on a deal by July 21, 2025," the statement read.

"The June 30, 2025 collection will be halted, and Minister Champagne will soon bring forward legislation to rescind the Digital Services Tax Act," the statement concluded.