Canada will rescind its digital services tax in an effort to restart trade negotiations with the United States.

The move follows President Trump abruptly terminating “ALL discussions” with Canada due to the tax.

President Trump Announces ALL Trade Discussions With Partner Terminated, “Effective Immediately”

“We have just been informed that Canada, a very difficult Country to TRADE with, including the fact that they have charged our Farmers as much as 400% Tariffs, for years, on Dairy Products, has just announced that they are putting a Digital Services Tax on our American Technology Companies, which is a direct and blatant attack on our Country,” Trump said Friday.

“They are obviously copying the European Union, which has done the same thing, and is currently under discussion with us, also. Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately,” he continued.

“We will let Canada know the Tariff that they will be paying to do business with the United States of America within the next seven day period. Thank you for your attention to this matter!” he concluded.

Full post:

The Canadian government announced in a press release that it would walk back the tax to achieve a deal with the United States.

"Canada’s new government is engaged in complex negotiations on a new economic and security partnership with the United States, focused on getting the best deal for Canadian workers and businesses. Prime Minister Carney has been clear that Canada will take as long as necessary, but no longer, to achieve that deal," the press release read.

"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," it continued.

🚨 BREAKING: Canada has RESCINDED their digital service tax on Americans in an effort to resume trade talks with President Trump, per Bloomberg

President Trump wins AGAIN 🔥 pic.twitter.com/jKHKBOjW5V

— Nick Sortor (@nicksortor) June 30, 2025

Cont. from the press release:

The DST was announced in 2020 to address the fact that many large technology companies operating in Canada may not otherwise pay tax on revenues generated from Canadians. Canada’s preference has always been a multilateral agreement related to digital services taxation. While Canada was working with international partners, including the United States, on a multilateral agreement that would replace national digital services taxes, the DST was enacted to address the aforementioned taxation gap.

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

"Government of Canada rescinds digital services tax to advance broader trade negotiations with the United States," Finance Canada stated.

Government of Canada rescinds digital services tax to advance broader trade negotiations with the United States.

https://t.co/dTb9YDDA7u pic.twitter.com/mdFSMKma6L

— Finance Canada (@FinanceCanada) June 30, 2025

More info from CNN:

Trump has lumped DSTs into what he calls “non-tariff trade barriers,” ways for other countries to restrict competition within their borders – often, Trump says, at the expense of US companies.

The Canadian DST was set to take effect on Monday, retroactive to 2022. Canada’s plan to cancel the tax is a major win for Trump, who often says that other countries are “ripping off” the United States.

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Canada and the US are major trading partners, but Trump upended that relationship soon after returning to office in January, threatening a tariff of at least 25% on all Canadian exports.

Since then, Trump has made a number of changes to his trade policy and to tariff rates, not just for Canadian goods but for imports from across the world. The whipsaw changes have stoked uncertainty in the US and abroad, prompting companies large and small to reconsider their plans for the rest of the year.

Nor are Trump’s tariff changes over: On July 9, a deadline for dozens of countries to avoid “reciprocal” tariffs unless they negotiate deals expires. While Trump could extend that deadline if he chose, it’s unclear yet if he will do so.

Canada is the top buyer of American goods, importing $349 billion worth last year, according to Department of Commerce data. Meanwhile, Canada shipped $413 billion worth of goods to the US last year, the third-highest source of foreign goods.