U.S. and Canada restart trade talks after conflict over digital services tax
Canada and the United States have restarted trade talks after Prime Minister Mark Carney's government dropped Canada's digital services tax.
U.S. President Donald Trump suspended negotiations with Canada over the tax on Friday. Following a phone call between Carney and Trump on Sunday, Ottawa announced that it was eliminating the tax.
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White House economic adviser Kevin Hassett said Monday the U.S. would immediately restart trade talks with Canada. A spokeswoman for the Prime Minister's Office confirmed trade talks have resumed.
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'Thank you Canada for removing your Digital Services Tax,' U.S. Commerce Secretary Howard Lutnick says
Hassett made the comments in an interview on Fox News, adding Trump asked Canada to drop the tax at the G7 meeting in Alberta earlier this month. He said the removal of the tax means Canada and the U.S. can get back to negotiations.
The tax would have applied a three per cent levy on revenue from Canadian users to large tech companies, including Amazon, Google, Meta, Uber and Airbnb.
Canada's move to drop the tax came just as the first payment under the tax was about to come due. The initial payment was retroactive to 2022 and could have collectively cost American companies US$2 billion.
On Monday, business groups on both sides of the border praised the government for moving to eliminate the tax, while critics accused the government of capitulating to the U.S.
Bloc Quebecois Leader Yves-Francois Blanchet said Carney campaigned during the election on finding a way out from under Trump's tariffs but has nothing to show for it so far.
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« Le gouvernement Carney a sollicité et obtenu le mandat de négocier la fin des tarifs et un nouvel accord commercial avec les États-Unis de Donald Trump. Il a fait de lourds compromis en matière de défense, de frontières et de contre-tarifs, puis le voici en train de reculer sur… pic.twitter.com/tS0kt9Izea
— Yves-F. Blanchet 🎗⚜️ (@yfblanchet) June 30, 2025
In a social media post, Blanchet said Carney's government 'made significant compromises on defence, borders and counter-tariffs, and now it is backtracking on a widely supported measure to protect culture, still with nothing to show for it — no gains or progress for Quebec and Canada, neither on tariffs nor on trade.
'This is deeply concerning,' he said.
Interim NDP Leader Don Davies also sounded off on social media, saying the decision to end the digital services tax amounts to 'pure caving in to Trump and his billionaire friends.'
'Canada is a sovereign country with the right to make our own tax laws. Abandoning fair taxation of tech giants is unacceptable appeasement,' Davies said.
Davies said that, coupled with Carney's openness to Trump's 'Golden Dome' missile defence plan and his sprint to meet the new 5 per cent NATO defence spending benchmark, 'it's looking more & more like Mr. Carney had his elbows up during the pre-game skate _ only to drop them once the game started.'
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