The Canadian government is pulling back on a Digital Services Tax on the US, recinding it entirely before it went into effect.
Why? Canada is back in its trade talks with the US, and anticipates a trade deal soon.
The news comes after US President Donald Trump took to social media a few days earlier to term the new tax as a “direct and blatant attack.” The tax had been set to go into effect on June 30th.
What’s Happening Now?
Trump announced his objections to the tax on June 27, saying that he was suspending trade talks with Canada as a result.
Now, Canadian Prime Minister Mark Carney has announced that the tax is being rescinded. Carney was quick to establish a specific timeline for the trade deal talks to resume, saying that “today’s announcement will support a resumption of negotiations toward the July 21, 2025, timeline set out at this month’s G7 Leaders’ Summit in Kananaskis.”
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Speaking to Transport Topics, political science professor Daniel Béland called the news a “clear victory” for Trump, adding that “President Trump forced PM Carney to do exactly what big tech wanted. U.S. tech executive will be very happy with this outcome.”
What’s the Digital Services Tax?
The big tech companies in question would all been impacted by the new tax.
Specifically, the tax would have imposed a 3% levy on revenues from digital services paid by Canadian users, and it would have been applied retroactively, costing companies an estimated $2 billion when it went into effect.
Amazon, Google, and Meta, as well as Uber and Airbnb were among the companies that sell digital services to those in Canada.
The services in question can range from search engines to social media or online marketplaces, but they come with a few built-in caps that would exempt many smaller tech companies entirely: The tax would have only applied to revenues exceeding $20 million. It would also have only applied to companies with $1.1 billion or more in global revenue.
Canada-US Tariff Discussions Continue
A few of the tariffs that would be discussed in the talks likely include the new sky-high 50% tariffs on steel and aluminum imposed on Canada by the Trump administration earlier in the year, in addition to a 25% tariff on automobiles.
A 90-day pause for tariff negotiations with a lengthy list of countries is set to expire on July 9th, though it hasn’t resulted in a significant amount of deals just yet.
The new tariffs — and any potential increases in the future — are one more element keeping logistics professionals on their toes, as our recent 2025 Logistics Report unpacked.
