Carney says he 'expected' Trump to demand digital services tax be dropped
(UPDATE: June 30 at 12:05 pm): Mark Carney has confirmed that he has spoken with President Donald Trump and that trade negotiations between the US and Canada have reopened.
He said he had a "good conversation" with Trump last night and the two were aiming to wrap up a deal by July 21, as "agreed in Kananaskis."
When asked whether he'd got anything in exchange for abandoning the digital services tax, Carney said: "We have, to be clear... it's part of a bigger negotiation. It's something that we expected, in the broader sense, that would be part of a final deal.
He added: "We're making progress toward a final deal. There's more to be done, to be clear."
The dropping of the tax, he added, "provides some certainty." He also said its abandonment was a "question of timing."
(UPDATE: June 30 at 8:55 am): White House adviser Kevin Hassett has confirmed that Canada-US negotiations on a new trade deal have now officially resumed.
He made the announcement while speaking to news shows in the US.
(Original story: June 30 at 6:30 am): The Liberal government has backed down on its controversial digital services tax just days after Donald Trump said he was “terminating” trade talks over the levy.
In a statement released on Sunday night, Prime Minister Mark Carney said his government “will always be guided by the overall contribution of any possible agreement to the best interests of Canadian workers and businesses.”
He added that the U-turn “will support a resumption of negotiations toward the July 21, 2025, timeline [to reach a trade deal with the US] set out at this month’s G7 Leaders’ Summit in Kananaskis.”
The surrender came just hours before the first retroactive payment was due under the digital services tax, which would have disproportionately hit US tech firms.
American giants such as Google, Meta, Apple, Amazon and Uber have long complained about the levy.
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. https://t.co/b944wQ4cyn
Trump, who like his rivals in the Democratic Party has received large financial donations from tech firms, said on Friday that the tax was a “direct and blatant attack” on the US.
In the statement issued last night, Finance Minister François-Philippe Champagne said the Carney government “is focused on building the strongest economy in the G7 and standing up for Canadian workers and businesses.”
He added: “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.”
That language was a dramatic about-face from Champagne, who said on June 19 that the tax would definitely go ahead.
He said it "is not the big thing," explaining that "we had fairly long and extensive discussions at the last G7" about different tax regimes.
Value added tax (VAT) in Europe and the digital services tax in Canada are "neutral," Champagne claimed, meaning "there's no distinction in terms of import and export."
In a post this morning, Commerce Secretary Howard Lutnick thanked Canada for abandoning the tax, claiming it was “intended to stifle American innovation and would have been a deal breaker for any trade deal with America.”
He had previously said the tax was an attempt “to take advantage of our 30 Trillion dollar economy” that would “harm out Great Companies.”
The initial haul from the tax was estimated to be about $2 billion. Over the next five years, it was projected to raise about $7.2 billion.
Thumbnail photo credit: Mark Carney/The White House/X
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