Payam Javan: In a swift response to U.S. President Donald Trump’s decision to halt trade negotiations, Canada announced on June 29, 2025, that it will rescind its controversial digital services tax (DST) targeting U.S. technology companies. The move comes just hours before the tax’s first payments were due on June 30, following Trump’s announcement on June 27 that he was terminating all trade discussions with Canada, citing the 3% tax on tech giants’ revenue from Canadian users as a “direct and blatant attack” on American interests. Canadian Prime Minister Mark Carney and Trump have since agreed to resume negotiations, aiming for a comprehensive trade deal by July 21, 2025, to bolster economic ties between the two nations.

The DST, enacted in 2020 and effective from June 2024, was designed to ensure large tech firms like Amazon, Google, and Meta pay taxes on revenues generated in Canada, with retroactive payments dating back to 2022. Canada’s Finance Minister François-Philippe Champagne stated that rescinding the tax would facilitate “vital progress” in trade talks, with legislation to repeal the DST Act forthcoming. The decision reflects Canada’s strategic pivot to prioritize its trade relationship with the U.S., its largest export market, which saw $349.4 billion in U.S. goods imported last year, while Canada exported $412.7 billion to the U.S.