Canada has scrapped its tax targeting Big Tech companies in the US after President Donald Trump threatened to cut off trade talks in response to the fee. On Sunday, the Canadian government announced that it will no longer implement the Digital Services Tax as it works to reach a trade deal with the US by July 21st.
The Digital Services Tax would’ve targeted US-based tech companies like Meta, Amazon, Google, and Uber with a three percent fee on revenue earned from online marketplaces, advertising, social media, and the sale of Canadian user data. The tax officially went into effect last year, but Canada planned to begin collecting payments, which would’ve applied retroactively to 2022, on Monday. The first round of payments would’ve amounted to nearly $3 billion in fees, according to a trade group backing the Big Tech companies.
The Trump administration has similarly put pressure on the UK to drop its digital services tax, which also goes after tech companies in the US. The tax still remains in effect, though White House trade adviser Peter Navarro said last month that the US is still in “negotiations” with the UK over the fee.
Last week, President Trump called Canada’s digital services tax a “blatant attack on our country” and said the US is “terminating ALL discussions on trade with Canada” as a result of the country’s decision to move forward with the fee. Canada hit back with a 50 percent surcharge on steel imports that exceed a newly-imposed quota.
“Rescinding the digital services tax will allow the negotiations of a new economic and security relationship with the United States to make vital progress and reinforce our work to create jobs and build prosperity for all Canadians,” François-Philippe Champagne, Canada’s Minister of Finance and National Revenue, said in a statement. Canada still faces a 25 percent tax on goods imported from the country, along with a 50 percent tariff on its steel and aluminum.
