Trade negotiations with Canada have stopped, Trump says
President Donald Trump says he has stopped negotiating trade deals with Canada for now.
OTTAWA, June 29 (Reuters) – Canada abolished the digital services tax on U.S. technology companies late Sunday, hours before it took effect to halt trade negotiations with the United States.
Canadian Prime Minister Mark Carney and President Donald Trump will resume trade negotiations to agree to the deal by July 21st, Canada’s Treasury said in a statement.
Trump suddenly called off trade talks over taxes targeting US technology companies on Friday, calling it a “blatant attack.”
He repeated his comments on Sunday, vowing to set a new tariff rate on Canadian goods next week, threatening to bring US-Canadian relations back into chaos after a relatively calm period.
The breakdown of the trade talks said they agreed to close the new economic agreement within 30 days after the two leaders met at the G7 in mid-June.
Canada’s planned digital tax was 3% of digital services revenues earned by companies from Canadian users over $20 million in calendar year, with payments being retroactive until 2022.
It would have influenced US technology companies, including Amazon Amzn.o, Meta Meta.o, Alphabet’s Google Google.o, and Apple Aapl.o.
The collection will be suspended on Monday, with Finance Minister François Philippe Champagne going to file a law to repeal the Digital Services Tax Act, according to a Canadian Treasury statement.
“DST was announced in 2020 to address the fact that many large technology companies operating in Canada may not pay taxes on the income generated by Canadians,” the statement said. “Canadian preference has always been multilateral agreements related to digital services taxation.”
Stock index futures rose after news of digital taxes being cancelled and bullish sentiment leaking to Asian markets.
Canada is the second largest US trading partner after Mexico and the largest buyer of US exports. Last year it purchased $34.94 billion in US goods and exported $412.7 billion to the United States, according to data from the US Census Bureau.
The Biden administration called for tax dispute resolution consultations in 2024, calling them inconsistent with Canada’s North American trade agreement obligations.
Canada has been evading Trump’s broad tariffs imposed in April, but faces a 50% steel and aluminum obligation.
(Reporting by Kanjyik Ghosh of Bengaluru and Written by Promit Mukeljee and Caroline Stauffer in Ottawa, Edited by Christopher Cushing and Michael Perry)
