Canada to Repeal Digital Services Tax, Paving Way for U.S. Trade Talks

Canada announced plans to repeal its Digital Services Tax (DST), a move that removes a major obstacle to renewed trade and security negotiations with the United States. Finance Minister François-Philippe Champagne confirmed Monday that the government will stop collecting the DST from June 30 and will introduce legislation to revoke the Digital Services Tax Act, originally introduced in 2020 to tax large multinational tech companies operating in Canada.

The U.S. had strongly opposed the tax, viewing it as discriminatory toward American firms. Last week, President Donald Trump abruptly ended trade discussions, calling the DST a “blatant attack.” The Canadian government's decision to roll back the measure is seen as an important step in restoring momentum to stalled talks.

Champagne stated that scrapping the tax will allow both nations to make meaningful progress toward a new economic and security partnership. Talks are expected to resume immediately, with the goal of reaching a comprehensive agreement by July 21. The timeline aligns with commitments made at the recent G7 Leaders’ Summit in Kananaskis.

Prime Minister Mark Carney emphasized the importance of achieving a deal that benefits workers and businesses on both sides of the border. “We’ll take as long as necessary, but no longer, to secure the right agreement,” Carney noted.

The repeal of the DST marks a significant policy shift and signals Canada’s commitment to strengthening cross-border relations. With tech policy and digital taxation at the heart of modern trade disputes, this decision could also influence other nations considering similar levies. As negotiations resume, attention will focus on whether both countries can bridge lingering divides and finalize a durable trade and security framework.