A day before coming into effect, the Canadian government decided to not launch its digital service tax (DST) after President Trump shared on Truth Social that the U.S. would terminate all trade with Canada over the tax.
The tax was set to make digital tech giants like Facebook and Google pay a three percent tax to help the Canadian economy since most tech giants have an outsized impact in Canada, but little economic effect. This tax has been debated and in the works since it was introduced by the Trudeau government in 2020.
In a press release Canada’s national minister of finance, François-Philippe Champagne, said “Canada’s new government is focused on building the strongest economy in the G7 and standing up for Canadian workers and businesses. Rescinding the digital services tax will allow the negotiations of a new economic and security relationship with the United States to make vital progress and reinforce our work to create jobs and build prosperity for all Canadians.”
In a separate quote, Prime Minister Mark Carney said, “In our negotiations on a new economic and security relationship between Canada and the United States, Canada’s new government will always be guided by the overall contribution of any possible agreement to the best interests of Canadian workers and businesses. Today’s announcement will support a resumption of negotiations toward the July 21, 2025, timeline set out at this month’s G7 Leaders’ Summit in Kananaskis.”
In a post on X.com U.S. Commerce Secretary Howard Lutnick said, “Thank you Canada for removing your Digital Services Tax which was intended to stifle American innovation and would have been a deal breaker for any trade deal with America.”
While it remains to be seen what happens with the DST over the summer, it seems like things are twisting out of the Canadian favour as we give into Donald Trump’s demands. The DST was in the works for years and followed in the footsteps of similar legislation in parts of Europe.
Update 30/06/2025 3:27 pm ET: CBC News reports that the Prime Minister held talks with Trump on Sunday night and that the removal of the digital sales tax is part of a larger negotiation.
Source: The Government of Canada
MobileSyrup may earn a commission from purchases made via our links, which helps fund the journalism we provide free on our website. These links do not influence our editorial content. Support us here.
