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Canada scraps tax targeting US IT giants: What’s at stake

Canada scraps tax targeting US IT giants: What’s at stake Mark Carney and Donald Trump to hold trade talks (Photo: Getty Images)

Canada’s Finance Ministry has announced it is scrapping the digital services tax that had targeted major American tech companies, Reuters reports.

The move is seen as an effort to revive trade negotiations with the United States.

According to the ministry, Canadian Prime Minister Mark Carney and US President Donald Trump will resume talks, aiming to strike a deal by July 21.

Canada has officially scrapped the 3% digital services tax that targeted revenue over $20 million from Canadian users, with retroactive payments dating back to 2022.

The move comes as Canada, the US’s second-largest trading partner after Mexico, attempts to repair strained trade relations. In 2024, Canada imported $349.4 billion in US goods and exported $412.7 billion to the US, according to trade data.

US-Canada trade talks

Former US President Donald Trump previously halted all trade negotiations with Canada, threatening to impose new tariffs.

He was outraged by Canada’s plan to introduce a digital services tax targeting American tech companies, calling it a direct and blatant attack on the US.