Trade negotiations between the United States and Canada resumed Monday morning after Canada scrapped its digital services tax targeting large technology firms. Prime Minister Mark Carney and U.S. President Donald Trump agreed to continue talks, aiming for the previously set July 21 deadline. The White House Press Secretary stated Canada “caved” to Trump’s demands, who had ended trade discussions over the tax. Despite the reversal, Canada remains in discussions with G7 allies regarding an international tax, and both sides express optimism about reaching an agreement within the established timeframe.
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In an effort to secure a comprehensive trade agreement with the United States, the Canadian government is taking action. Minister of Finance and National Revenue, François-Philippe Champagne, announced the rescinding of the Digital Services Tax (DST) in anticipation of a mutually beneficial partnership. Prime Minister Carney and President Trump have set a target of July 21, 2025, to finalize the deal. The DST, initially implemented in 2020 to address taxation gaps from large tech companies, will be halted, and legislation to repeal the Digital Services Tax Act will be introduced.
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In a surprising move, former President Donald Trump announced the termination of trade discussions with Canada on Friday, citing Canada’s implementation of a digital services tax on tech companies. Trump stated that the tax, which is retroactive to 2022 and due to be paid beginning June 30, was a direct attack on the United States. This announcement came shortly after a period of relative calm in trade announcements. In response, Canada retaliated by imposing quotas on some steel imports and a surcharge on imports exceeding those quotas.
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Negotiations between the UK and US to avoid tariffs imposed by the Trump administration included discussions regarding the UK’s digital services tax and Online Safety Act. The White House opposes the digital services tax, while concerns exist in the US regarding the Online Safety Act’s impact on free speech. While neither act is expected to be fully repealed, modifications to lessen their impact on US tech companies are under consideration. The UK government maintains its commitment to protecting children online, but is exploring ways to amend the Online Safety Act to reach a trade agreement.
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John Q. Hosedrinker