Donald Trump has reason to celebrate. In a stunningly quick reversal, Ottawa satisfies his demands and cancels controversial taxes against the U.S. tech giants, ending the standoff that began on Friday.
“Canada will revoke the Digital Service Tax (DST) in a bid to engage in a comprehensive and mutually beneficial trade arrangement with the United States,” Finance Minister François-Philippe Champagne announced in a statement on Sunday evening.
After the announcement, Prime Minister Mark Carney and President Trump “agree that the two sides will resume negotiations in a bid to reach an agreement by July 21, 2025.”
This marked a stunning and swift victory for Trump, who shocked the market on Friday’s truth social platform. He announced that due to Canada’s decision to impose digital services tax on U.S. technology companies, “we are ending all discussions on trade with Canada and will take effect immediately.”
For Trump, such a vote provides much-needed political victory at a critical moment. His presidency was defined by an active “America First” trade policy that launched a high-risk trade war with commodity tariffs in China and Europe. Now, this confrontational style is coming as the July 9 deadline approaches countries around the world to finalize a new trade deal with the United States or face a new wave of steep “reciprocity” tariffs. Forced key allies like Canada to fold so quickly and openly, sending a powerful message to other negotiating partners.
The victory also helps Trump project his power on home court after a political showdown bruises. His signature legislative priorities are “a big bill”, and even former allies like Elon Musk face fierce criticism for its massive spending and in-depth cuts to popular plans. Forced to drive a broken Republican Party through Congress to obtain the bill, ensuring a clear victory over foreign governments against unpopular technical taxes, this provides valuable positive momentum for the government.
Confrontation centers on Canada’s digital service tax. The measure imposes a 3% tax on Canadian revenues from large digital companies, such as Amazon, Google and Meta. Taxes have been in effect since last year, but the first payments will be paid on Monday, June 30.
“The collection will be stopped on June 30, 2025,” Champagne said in a statement.
Taxation has always been the main point of debate. While Canada is not the only country to implement such measures, joining countries such as France, Italy and the United Kingdom, the U.S. government believes that these taxes are unfairly targeting U.S. companies. In recent weeks, Canadian and U.S. business groups have signed letters calling on the Canadian government to repeal or suspend taxes, along with alliances of U.S. technology industry organizations and U.S. elected officials.
Prime Minister Mark Carney has tried to use the decision as a step towards a broader, more beneficial agreement. “In our negotiations on a new economic and security relationship between Canada and the United States, Canada’s new government will always be guided by the overall contribution of any possible agreement to the best interests of Canadian workers and businesses,” Carney said.
