Canada rescinds the Digital Services Tax targeting US companies, set to go into effect on June 30, “in anticipation of” a US trade deal, as trade talks resume
It's using trade to forcing governments into policies that would never pass their national legislatures. Julie S. Lalonde / @julieslalonde : The fact that we had to spend the last week looking at footage of Jeff Bezos' absurdly ostentatious, multi day wedding and then wake up to the news that Carney sold us out to those very same broligarchs? — Sickening. T. Ryan Gregory / @tryangregory : Carney continues to do everything he can to appease Trump. It will not work. — www.canada.ca/en/departmen... Jakob-Moritz Eberl / @jamoeberl : Very disappointing. Companies should pay taxes where they make their profits - from citizens whose societies they benefit from (and disrupt). Even worse, it's exactly these tech giants who are reshaping democracy in the US and worldwide. #TechTax Elaine / @oritart.ca : Canada is recinding the 3% digital services tax, targeted against American tech giants, who would otherwise pay zero taxes while extracting value from Canadians. — This is a disgraceful betrayal, Carney. You ran on Canada not being for sale, but apparently you're okay with just giving it away. Sasha Fury / @sashafury : Carney just let Trump cancel Canadian taxation law that had been on the books for a year. Oooh, what backbone! What sovereignty! Elbows up, Canada! @spudislander45 : Why this govt think a trade deal with this USA admin will be honoured? — Trump will continue to move the goal post. His plan is economic destruction. That's the goal. We have to retaliate. Trudeau was the last retaliation, no action since. #cdnpoli #USTARIFFS — apnews.com/article/cana... @youcaughtscott.com : lmao lmao lmao literally whatever Trump wants Carney will do. [embedded post] X: Howard Lutnick / @howardlutnick : Thank you Canada for removing your Digital Services Tax which was intended to stifle American innovation and would have been a deal breaker for any trade deal with America. François-Philippe Champagne / @fp_champagne : Canada is engaged in complex negotiations on a new economic and security partnership with the U.S. Rescinding the DST will allow the negotiations to make vital progress and reinforce our work to create jobs and build prosperity for all Canadians. 🔗https://www.canada.ca/... Harley Finkelstein / @harleyf : Canada should be the easiest place on earth to build something big. Killing the Digital Services Tax gets us closer. That tax didn't just hit foreign companies, it placed a ceiling on the success of our own entrepreneurs. Thanks, @FP_Champagne and @MarkJCarney, for backing [image] Pierre Poilievre / @pierrepoilievre : As recently as two days ago, the finance minister insisted the Digital Services Tax would proceed. Then the Prime Minister put his elbows down and cancelled the tax at the 11th hour. The tax is gone for good. In exchange, the Prime Minister should insist that the U.S. immediately rescind softwood lumber tariffs. We need to make gains for our workers in these talks. Canadians need certainty that Liberals will put Canada First... Michael Geist / @mgeist : Caving on DST just latest bad risk assessment that has become the hallmark of Canadian tech policy. Talk tough, practically dare companies and governments to respond, and then frantically seek an exit strategy when they do. We need a tech regulation reset. https://x.com/... Paris Marx / @parismarx : Mark Carney's decision to rescind Canada's digital services tax is a cowardly move that shows Trump he can be pressured into trade concessions. It also shows Carney is willing to give into corporate demands, and particular those of the tech industry. https://www.disconnect.blog/ ... LinkedIn: John Ruffolo : As expected, the Digital Services Tax has been rescinded. It was a dumb tax that served little purpose and was in contravention of the OECD Model for taxation. … Pete Rhodes : Canada's DST dropped — I'm finding it fascinating to see how effective the US administration is at using tax as a stick to ensure favourable international trade outcomes. … Kim G C Moody : The right move. But extremely poor leadership to have gotten to this brinkmanship point. 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Context & Ripple Effects
Canada’s reversal follows Washington’s stated decision to end trade discussions over the planned levy, making the tax a direct bargaining point rather than a standalone domestic measure.
The move also sits against a longer, unresolved effort to coordinate digital taxation: the U.S. had earlier removed a key obstacle to a multilateral digital-tax agreement, while later EU coverage showed negotiations continuing to shape national choices.
First-order effects
- The planned Canadian levy on U.S. technology companies does not take effect, removing the immediate tax exposure it would have created.
- Canada and the United States resume trade talks, with Ottawa having yielded on the issue that had triggered the breakdown.
Second-order effects
- The episode strengthens the U.S. negotiating position in disputes over taxes aimed at its technology companies; other governments weighing similar measures must account for trade retaliation risk.
- A subsequent EU decision to drop a proposed digital tax underscores how bilateral trade negotiations can narrow the room for unilateral digital-tax policies.
Third-order effects
- If this pattern persists, digital-tax policy will be negotiated increasingly through trade relationships rather than set independently by individual governments.
- The incentive to pursue a coordinated international framework rises, but the Canadian reversal also shows that such coordination can be overtaken by immediate bilateral pressure.
The trend: Digital taxation is becoming a trade-negotiation lever, with unilateral levies on major U.S. technology firms increasingly constrained by cross-border bargaining.