Canada Halts Digital Services Tax to Revive U.S. Trade Talks

Canada has postponed its proposed digital services tax on U.S. technology firms to facilitate trade negotiations with the U.S. This decision aims to ease tensions following trade disruptions initiated by President Trump. Canada prefers a multilateral agreement over its unilateral digital tax previously planned to apply retroactively.

In a last-minute decision, Canada has shelved its proposed digital services tax aimed at U.S. technology giants, mere hours before it was set to commence. The move is designed to rekindle stalled trade negotiations with the United States, as confirmed by Canada's finance ministry late Sunday.

Canadian Prime Minister Mark Carney, in tandem with U.S. President Donald Trump, is poised to reengage in trade talks, seeking a finalized agreement by July 21. The trade discussions had abruptly halted when Trump withdrew on Friday, decrying the tax as a 'blatant attack' on U.S. firms.

The halted tax, which would have levied a 3% charge on large tech companies' Canadian-generated revenues, particularly affected firms like Amazon, Meta, and Apple. Canada's decision reflects a preference for a multilateral resolution in digital services taxation, aimed at preserving strong economic ties with its second-largest trading partner.

(With inputs from agencies.)