June 30, 2025
RED FM News Desk
SURREY, BC – Canada has officially dropped its controversial digital services tax, a move made just hours before it was slated to take effect this Monday. The decision aims to breathe new life into stalled trade negotiations with the United States.
The federal government announced late Sunday that it would resume trade discussions with the U.S. This came right before the first payments for the tax were due from major tech companies like Amazon and Google, which would have amounted to a hefty two-billion-dollar bill for U.S. firms.
Canada’s planned digital tax, set at 3% of digital services revenue from Canadian users exceeding $20 million in a calendar year, was also intended to be retroactive to 2022.
Last week, U.S. President Donald Trump had already voiced strong opposition, threatening to terminate all trade talks with Canada over the tax. He called it a “direct and blatant attack” on the U.S. and warned of retaliatory tariffs.
US Welcomes Decision
The White House wasted no time confirming the restart of trade negotiations. U.S. economic adviser Kevin Hassett stated on Monday that talks would resume immediately following Canada’s reversal on the digital services tax.
“Absolutely,” Hassett told Fox News, noting that President Trump had personally requested Canada drop the tax during the G7 meeting. “It’s something that they’ve studied, now they’ve agreed to, and for sure, that means that we can get back to the negotiations.”
U.S. Commerce Secretary Howard Lutnick publicly thanked Canada for its decision on social media. He asserted that the tax, which he believed was “intended to stifle American innovation,” would have been a “deal breaker for any trade deal with America.”
The Canadian Ministry of Finance has confirmed that Prime Minister Mark Carney and U.S. President Donald Trump will resume trade discussions with the goal of reaching an agreement by July 21. This swift policy reversal by Canada underscores the pressure it faced from the U.S. over the contentious levy.
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