Canada's digital tax revoked following Trump's condemnation
WASHINGTON, D.C.: On Friday, President Donald Trump announced that he was halting trade discussions with Canada due to its decision to proceed with a tax on technology companies, which he described as "a direct and blatant attack on our country."
In a post on his social media platform, Trump revealed that Canada had informed the U.S. of its commitment to the digital services tax. The tax will affect both Canadian and foreign businesses that interact with online users in Canada and will take effect on Monday.
"In light of this egregious tax, we are terminating ALL trade discussions with Canada, effective immediately. We will inform Canada of the tariff they will incur to do business with the United States within the next seven days," Trump stated.
Canadian Prime Minister Mark Carney responded, indicating that Canada would "continue to engage in these complex negotiations in the best interests of Canadians. It's all part of the negotiation process."
In fact by Sunday night, Canada had rescinded the digital tax in favor of continuing negotiations.
This announcement marks the latest twist in the trade conflict that Trump has initiated since beginning his second term in January. Relations with Canada have fluctuated, especially after Trump previously hinted at the possibility of Canada becoming a U.S. state.
Carney met with Trump in May at the White House, maintaining a polite yet firm stance. Last week, Trump visited Canada for the G7 summit in Alberta, where Carney mentioned that both countries agreed on a 30-day deadline for trade negotiations.
The digital services tax would have imposed a three percent levy on revenue from Canadian users for companies like Amazon, Google, Meta, Uber, and Airbnb, applying retroactively and creating a potential US$2 billion liability for U.S. businesses by the end of the month.
Discussions between Canada and the U.S. have also included addressing a range of steep tariffs imposed by Trump on goods from Canada.
The Republican president had previously indicated that the U.S. would soon send letters to various countries regarding new tariff rates his administration plans to implement.
Trump has already enacted 50 percent tariffs on steel and aluminum, 25 percent tariffs on automobiles, and a 10 percent tax on imports from most countries. He may raise these rates on July 9, following a 90-day negotiation period he initiated.
Additionally, Canada and Mexico face individual tariffs of up to 25 percent, which Trump implemented to combat fentanyl smuggling, although certain products remain protected under the 2020 U.S.-Mexico-Canada Agreement established during Trump's first term.
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