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Canada Scraps Digital Services Tax to Relaunch US Trade Talks

Ottawa yielded to President Trump’s tariff threat, aiming to seal a trade deal by July 21.

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The LNG tanker GasLog Glasgow clears the dock at the LNG Canada facility in Kitimat, B.C., on Monday. The tanker is carrying LNG Canada's first export of liquefied natural gas to Asia.

Overview

  • Canada formally withdrew its 3% digital services tax hours before the first payments were due, yielding to President Trump’s threat of Section 301 tariffs.
  • The repeal immediately revived US-Canada trade negotiations, with negotiators targeting a comprehensive agreement by July 21.
  • Major tech companies and industry groups hailed the rescission as a victory for US firms facing projected costs of about US$2 billion.
  • The administration plans to press the European Union and other countries to repeal their own digital taxes ahead of a July 9 deadline for reciprocal tariffs.
  • Analysts say the move highlights Washington’s reliance on tariff leverage to protect its technology sector and could shape global digital-tax policies.