Canada has rescinded its digital services tax targeting U.S. technology firms in a bid to advance trade negotiations with the U.S., Canada’s finance ministry said in a statement on Sunday, days after U.S. President Donald Trump called off trade talks.
Canadian Prime Minister Mark Carney and Trump will resume trade negotiations in order to agree on a deal by July 21, 2025, the ministry said.
On Friday, Trump abruptly cut off trade talks with Canada over its tax targeting U.S. technology firms, saying that it was a “blatant attack” and that he would set a new tariff rate on Canadian goods within the next week.
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The tax was 3% of the digital services revenue a firm takes in from Canadian users above $20 million in a calendar year, and payments will be retroactive to 2022.
Canada is the second-largest U.S. trading partner after Mexico, and the largest buyer of U.S exports. It bought $349.4 billion of U.S. goods last year and exported $412.7 billion to the U.S., according to U.S. Census Bureau data.
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