In a dramatic turn of events, President Donald Trump has notched a significant trade victory as Canada announced it will rescind its controversial Digital Services Tax (DST) targeting American tech giants, just days after Trump threatened to halt all trade negotiations with Ottawa. On June 29 evening, Canadian Finance Minister François-Philippe Champagne declared, “Canada would rescind the Digital Services Tax in anticipation of a mutually beneficial comprehensive trade arrangement with the United States.” The decision halts the collection of the 3% tax on digital services revenue from companies like Amazon, Google, and Meta, which was set to begin Monday, June 30, 2025, and would have applied retroactively to 2022.
The reversal follows Donald Trump’s Friday bombshell on Truth Social, where he announced the immediate termination of trade talks with Canada in response to the DST, which he deemed unfair to American firms. The move sent shockwaves through markets and intensified pressure on Canada, a key U.S. ally.
Prime Minister Mark Carney and President Trump have since agreed to resume negotiations, aiming to finalize a new trade deal by July 21, 2025, ahead of a looming July 9 deadline for global trade agreements with the U.S. Failure to meet this deadline could trigger steep, “reciprocal” tariffs, a cornerstone of Trump’s aggressive “America First” trade policy.
Donald Trump's clear message for Canada
The capitulation marks a clear win for Trump, who has faced domestic challenges navigating a fractured Republican Party to pass his ambitious “One Big Beautiful Bill.” The legislation, criticized by figures like Elon Musk for its massive spending and cuts to popular programs, has strained Trump’s political capital. Forcing Canada to back down publicly strengthens his position both at home and in ongoing trade talks with nations like China and Europe.
Canada’s DST, which targeted digital firms earning over $20 million annually from Canadian users, had drawn ire from U.S. tech groups and lawmakers, who argued it unfairly singled out American companies. Similar taxes exist in countries like France and the UK, but Canada’s rapid reversal underscores Trump’s influence.
Carney framed the decision as strategic, stating, “Canada’s new government will always be guided by the best interests of Canadian workers and businesses in our negotiations for a new economic and security relationship with the United States.”
The swift resolution signals Trump’s ability to leverage high-stakes brinkmanship, sending a message to other nations as the U.S. pushes for favorable trade terms globally.
The reversal follows Donald Trump’s Friday bombshell on Truth Social, where he announced the immediate termination of trade talks with Canada in response to the DST, which he deemed unfair to American firms. The move sent shockwaves through markets and intensified pressure on Canada, a key U.S. ally.
Prime Minister Mark Carney and President Trump have since agreed to resume negotiations, aiming to finalize a new trade deal by July 21, 2025, ahead of a looming July 9 deadline for global trade agreements with the U.S. Failure to meet this deadline could trigger steep, “reciprocal” tariffs, a cornerstone of Trump’s aggressive “America First” trade policy.
Donald Trump's clear message for Canada
The capitulation marks a clear win for Trump, who has faced domestic challenges navigating a fractured Republican Party to pass his ambitious “One Big Beautiful Bill.” The legislation, criticized by figures like Elon Musk for its massive spending and cuts to popular programs, has strained Trump’s political capital. Forcing Canada to back down publicly strengthens his position both at home and in ongoing trade talks with nations like China and Europe.
Canada’s DST, which targeted digital firms earning over $20 million annually from Canadian users, had drawn ire from U.S. tech groups and lawmakers, who argued it unfairly singled out American companies. Similar taxes exist in countries like France and the UK, but Canada’s rapid reversal underscores Trump’s influence.
Carney framed the decision as strategic, stating, “Canada’s new government will always be guided by the best interests of Canadian workers and businesses in our negotiations for a new economic and security relationship with the United States.”
The swift resolution signals Trump’s ability to leverage high-stakes brinkmanship, sending a message to other nations as the U.S. pushes for favorable trade terms globally.
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