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Canada announced Sunday it would suspend enforcement of a digital services tax on U.S. technology companies, a move that prompted the Trump administration to agree to resume stalled trade negotiations later this month.
The Canadian government said the decision to halt the tax, which was set to take effect Monday, was made “in anticipation of a mutually beneficial comprehensive trade arrangement with the United States.”
Prime Minister Mark Carney informed the Trump administration of the suspension, and both countries plan to resume formal trade talks around July 21, according to officials from both sides.
The suspended tax targeted major American tech firms operating in Canada, and its enforcement had been a growing point of contention in bilateral talks. U.S. officials argued that the tax unfairly singled out American companies and threatened to impose retaliatory measures if it were to move forward.
The announcement follows a tense exchange between the two nations. On Friday, President Donald Trump called Canada’s tax an “attack” on the United States and ordered a freeze on trade negotiations to pressure Ottawa to back down.
“We have just been informed that Canada, a very difficult Country to TRADE with, including the fact that they have charged our Farmers as much as 400% Tariffs, for years, on Dairy Products, has just announced that they are putting a Digital Services Tax on our American Technology Companies, which is a direct and blatant attack on our Country,” Trump posted to Truth Social on Friday.
“They are obviously copying the European Union, which has done the same thing, and is currently under discussion with us, also. Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately. We will let Canada know the Tariff that they will be paying to do business with the United States of America within the next seven day period. Thank you for your attention to this matter!” he added.
U.S. Treasury Secretary Scott Bessent also told CNBC on Friday that U.S. Trade Representative Jamieson Greer would investigate the tax to “determine the amount of harm to the U.S. companies and the U.S. economy in general.”
“We disagree [with the tax], and we think that they discriminate against U.S. companies,” Bessent told CNBC’s Morgan Brennan on “Closing Bell: Overtime.”