Canada has decided to scrap its planned digital services tax (DST), paving the way for renewed trade negotiations with the United States. This move was welcomed by the White House, signaling a positive step toward resolving trade tensions between the two countries.
Canada Rescinds Digital Tax
On Sunday, Canada’s Minister of Finance and National Revenue, Francois-Philippe Champagne, announced that Canada will cancel its DST as it prepares for a broader trade agreement with the United States. The proposed tax would have imposed a 3% levy on revenue earned by U.S. tech giants like Amazon, Google, and Meta from Canadian users.
White House National Economic Council Director Kevin Hassett confirmed on Monday that trade talks between the U.S. and Canada will resume immediately following Canada’s decision. He mentioned that U.S. President Donald Trump asked Canadian Prime Minister Mark Carney to “take the DST tax off” during the recent G7 meeting in Canada.
“It’s something that they’ve studied, now they’ve agreed to. And for sure, that means that we can get back to the negotiations,” Hassett said in an interview.
EU Holds Its Ground
Meanwhile, the European Union is taking a different approach. Despite ongoing trade talks with the United States, the EU is refusing to negotiate its digital legislation. European Commission spokesperson Thomas Regnier stated on Monday that their digital laws are “not on the table” in trade negotiations.
“European Commission President Ursula von der Leyen has made it clear that EU legislation is not up for negotiation, and this also includes, of course, our digital legislation,” Regnier emphasized. “We’re not going to adjust the implementation of our legislation based on the actions of third countries. If we started to do that, then we would have to do it with numerous third countries.”
Despite tensions, the Commission remains committed to reaching a trade deal with the United States by July 9, when the U.S. may reimpose tariffs of up to 50% on several trading partners unless agreements are reached.
Trade Tensions Over Tech Regulations
The United States has criticized the EU’s digital regulations, including the Digital Markets Act (DMA) and the Digital Services Act (DSA), claiming they unfairly target American tech companies. In February, the White House warned it might consider retaliatory measures if EU regulators continued to focus on U.S. tech firms under these acts.
In April, the European Commission fined U.S. companies Apple and Meta for violating the DMA, escalating tensions further.
European Commissioner for Trade and Economic Security Maros Sefcovic announced plans to travel to Washington on July 1 to continue efforts toward a U.S.-EU trade deal. Reports suggest that the EU is willing to accept a trade arrangement that includes a 10% universal tariff on many exports but seeks lower rates on key sectors like pharmaceuticals, semiconductors, and commercial aircraft.
The EU is also pushing for quotas and exemptions to effectively lower U.S. tariffs on automobiles, car parts, steel, and aluminum.
