Canada Scraps Digital Services Tax After Trump Trade Talks Threat

Canada has rescinded a digital service tax on American tech giants to allow trade talks with the U.S. to resume to end an ongoing tariffs war.

The move follows U.S. President Donald Trump on Friday on Truth Social calling a halt to negotiations with Canada over a DST branded a “direct and blatant attack on our Country.”

Climbing down, the Canadian government in a statement on Sunday said it will withdraw the tax “in anticipation of a mutually beneficial comprehensive trade arrangement with the United States.” The U.S.-Canada trade talks are now expected to get back on track ahead of a July 21 deadline for a new deal.

Canada’s digital services levy on American digital platforms was introduced last year and Ottawa was set to start collecting the tax from foreign tech platforms from June 30. The bill for American tech players, which comes from a 3 percent levy imposed on their revenues from doing business in Canada and due on Monday, could have reached $2 billion annually.

Canada said it will introduce legislation to rescind the DST. The move has implications internationally where governments have similarly considered imposing regulation and taxes on dominant foreign streamers in their markets to fund domestic film and TV industry ambitions.

Canada in particular has used legislation to compel foreign digital platforms to hand over cash to help local producers compete against Hollywood by directly subsidizing local content. 

European governments have also proposed their own new taxes and regulations aimed squarely at the global streamers.

June 30, 5 am PST – Updated with additional detail.