Overview

• Canada’s 3% digital services tax, retroactive to 2022 and targeting firms with over C$20 million in Canadian revenue, was expected to yield more than C$2 billion.
• President Trump condemned the levy as a direct and blatant attack on US tech firms and threatened new tariffs under a Section 301 probe.
• Ottawa shelved the tax on June 30, halting the levy hours before its implementation and avoiding potential US trade sanctions.
• Trade and defense negotiations between Canada and the United States have resumed as both governments pursue a broader bilateral agreement.
• The reversal underscores stalled OECD efforts on global digital taxation and highlights how deep US-Canada trade ties give Washington leverage over Ottawa.