Canada Resumes US Trade Talks After Tech Tax/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ Canadian Prime Minister Mark Carney announced renewed trade talks with the U.S. after dropping Canada’s planned digital services tax. Trump hailed the reversal as a victory for American interests. Analysts warn Carney appears vulnerable to U.S. pressure.
Canada US Trade Talks Quick Looks
- Canada rescinds digital services tax to restart U.S. trade talks
- Tax targeted tech giants like Google, Meta, Amazon
- Carney and Trump spoke to clear path for negotiations
- Digital tax reversal seen as a win for Trump
- U.S. firms faced potential $2 billion tax bill
- Trade tensions persist over tariffs on steel, autos
- Analysts say Carney appears vulnerable to Trump’s tactics
- New trade talks aim for July 21 agreement deadline
Deep Look
Canada Drops Digital Services Tax, Clearing Path For Renewed Trade Talks With U.S. Amid Ongoing Tariff Tensions
TORONTO (AP) — Canadian Prime Minister Mark Carney confirmed late Sunday that Canada and the United States have restarted trade negotiations after Ottawa abandoned its controversial plan to impose a digital services tax on major U.S. technology companies.
The development follows President Donald Trump’s abrupt suspension of talks on Friday, when he accused Canada of orchestrating “a direct and blatant attack on our country” through its planned tax targeting American tech giants.
Tax Move Sparks Diplomatic Showdown
Canada had announced it would impose a 3% levy on revenue generated from Canadian users by tech behemoths such as Amazon, Google, Meta, Uber, and Airbnb. The tax was due to take effect Monday and would have applied retroactively, leaving American firms facing a $2 billion bill payable by month’s end.
In a statement Sunday, Carney confirmed that he and Trump held a phone call during which they agreed to resume negotiations, aiming to reach a trade deal by July 21, as set out during this month’s G7 Leaders’ Summit in Kananaskis, Alberta.
“Today’s announcement will support a resumption of negotiations toward the July 21, 2025, timeline,” Carney said.
Trump Declares Victory
Trump, posting on his social media network on Friday, had claimed Canada had previously signaled it would stick with the tax despite U.S. objections. His administration warned the tax amounted to discrimination against American businesses, sparking fears of fresh trade penalties.
Following Canada’s reversal, Trump quickly claimed victory, casting the move as evidence of his hardline negotiating tactics paying off. “It was obliterating like nobody’s ever seen before,” Trump told Fox News about his approach to trade conflicts.
Analysts Say Carney Appears Vulnerable
Daniel Béland, a political science professor at McGill University in Montreal, described Carney’s retreat as a “clear victory” for Trump and U.S. tech companies.
“At some point this move might have become necessary in the context of Canada-U.S. trade negotiations themselves, but Prime Minister Carney acted now to appease President Trump and have him agree to simply resume these negotiations,” Béland said. “It’s a clear victory for both the White House and big tech.”
He added that the reversal makes Carney appear vulnerable to Trump’s pressure. “President Trump forced PM Carney to do exactly what big tech wanted. U.S. tech executives will be very happy with this outcome,” Béland said.
Finance Ministers Engage In Parallel Talks
Canadian Finance Minister François-Philippe Champagne also held discussions with U.S. Treasury Secretary Scott Bessent on Sunday. Champagne emphasized that dropping the tax would help drive progress toward a broader economic and security framework between the two nations.
“Rescinding the digital services tax will allow the negotiations of a new economic and security relationship with the United States to make vital progress,” Champagne said.
Tariff Disputes Still Loom Large
Despite the thaw over the tech tax, significant trade tensions persist between the two nations. Trump has maintained steep tariffs, including 50% duties on steel and aluminum and 25% tariffs on autos. Additionally, he has imposed a 10% tax on imports from most nations, which could rise further after the current 90-day negotiating period ends on July 9.
Canada and Mexico are grappling with separate tariffs of up to 25%, justified by the Trump administration under the banner of fighting fentanyl smuggling, though certain products remain shielded under the 2020 U.S.-Mexico-Canada Agreement signed during Trump’s first term.
Path Forward Uncertain
Carney’s decision to withdraw the digital services tax removes one immediate obstacle but leaves deeper disputes unresolved. Whether a comprehensive deal can be achieved before the July 21 target remains uncertain, especially with Trump’s unpredictable trade policies still looming large.
For now, both leaders appear focused on avoiding an escalation that could threaten North America’s deeply intertwined economies. But analysts caution that the balance of power appears tilted toward Washington, leaving Ottawa with little room to maneuver without provoking fresh U.S. retaliation.
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