Canadian Prime Minister Mark Carney is preparing to resume trade talks with U.S. President Donald Trump after Canada announced it would rescind its digital services tax on American technology firms. This 3% tax, which took effect in June 2024, targeted revenue from large companies engaging online with Canadian users. Canada’s Department of Finance stated the tax would be repealed to facilitate a “mutually beneficial comprehensive trade arrangement” with the United States.
Carney and Trump agreed to resume negotiations with a goal to finalize a deal by July 21, 2025. Canada has also stopped collecting the tax scheduled for June 30, 2025, with legislation underway to repeal the Digital Services Tax Act entirely.
President Trump had previously ended trade discussions with Canada, citing the tax as the primary obstacle. He accused Canada of mimicking the European Union’s similar tax and criticized the country for imposing tariffs as high as 400% on U.S. dairy products, calling Canada “a very difficult country to trade with.” Trump also warned Canada it would face tariffs on trade with the U.S. in response.
These developments came after the two leaders met at the recent G7 summit, where they agreed to finalize a trade deal within 30 days. Canada is the United States’ largest trading partner, and the U.S. is one of Canada’s top export markets.
The article also references Trump’s proposal involving the “Golden Dome” missile defense system, intended to protect North America with a $175 billion satellite network. Trump suggested Canada could join this system, even hinting it might become the 51st U.S. state—a suggestion firmly rejected by Canadian officials and King Charles III.
Despite political tensions, Canada faces 50% U.S. duties on steel and aluminum imports. The trade negotiations remain crucial given the economic interdependence between the two nations.
With Canada’s withdrawal of the tax, there is renewed hope the trade talks will advance smoothly, helping to stabilize one of the world’s largest bilateral trading relationships.
