African News
Canada Drops Big Tech Tax Under Pressure, Resumes Trade Talks with US After Threats from Trump
Prime Minister Mark Carney announced late Sunday that trade talks between Ottawa and Washington are back on, just hours before the Canadian-imposed 3% levy on tech companies like Amazon, Meta, Google and Airbnb was set to take effect.
The tax would have been retroactive, with US firms owing an estimated $2 billion in back payments by the end of June.
Carney’s office said the decision was made “in anticipation” of progress toward a new trade agreement and came after a phone call with Trump on Sunday. “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.
Just two days earlier, Trump had abruptly frozen all trade talks with Canada in response to the tax, calling it “a direct and blatant attack on our country.” On his Truth Social platform, the president said Canada had “refused to back down” an accusation that now appears to have been resolved behind closed doors.
Canadian Finance Minister François-Philippe Champagne also confirmed talks with US Treasury Secretary Scott Bessent, saying in a statement, “Rescinding the digital services tax will allow the negotiations of a new economic and security relationship with the United States to make vital progress.”
The tax, which would have applied to digital revenue earned from Canadian users, had drawn sharp criticism from US officials and tech firms. Though Canada said the measure aimed to ensure fair taxation, critics warned it risked sparking a damaging trade war.
Daniel Béland, a political scientist at McGill University, described the rollback as a concession to Trump. “President Trump forced Prime Minister Carney to do exactly what big tech wanted,” Béland told reporters. “It’s a clear victory for the White House and a retreat for Ottawa.”
Trump, now in his second term, has imposed steep tariffs on Canadian steel, aluminum, and automobiles, and threatened further action if a new trade agreement is not reached by July 21.
His administration has also applied separate tariffs to Canada and Mexico under anti-fentanyl provisions, although some goods remain exempt under the USMCA agreement signed in 2020.
Trump’s push to reset North American trade terms has been rocky but deliberate. During the G7 summit earlier this month, he even joked that Canada might someday become a US state, remarks that were not received warmly in Ottawa.
For now, the digital services tax is off the table, and trade talks are back on. But with tariffs still looming and a tight deadline in place, the future of US-Canada economic relations remains uncertain.
