OTTAWA — Canada and the United States have restarted trade talks after Prime Minister Mark Carney's government dropped Canada's digital services tax.
U.S. President Donald Trump suspended negotiations with Canada over the tax on Friday. Following a phone call between Carney and Trump on Sunday, Ottawa announced that it was eliminating the tax.
White House economic adviser Kevin Hassett said Monday the U.S. would immediately restart trade talks with Canada. A spokeswoman for the Prime Minister's Office confirmed trade talks have resumed.
Hassett made the comments in an interview on Fox News, adding Trump asked Canada to drop the tax at the G7 meeting in Alberta earlier this month. He said the removal of the tax means Canada and the U.S. can get back to negotiations.
The tax would have applied a three per cent levy on revenue from Canadian users to large tech companies, including Amazon, Google, Meta, Uber and Airbnb.
Canada's move to drop the tax came just as the first payment under the tax was about to come due. The initial payment was retroactive to 2022 and could have collectively cost American companies US$2 billion.
On Monday, business groups on both sides of the border praised the government for moving to eliminate the tax, while critics accused the government of capitulating to the U.S.
Bloc Québécois Leader Yves-François Blanchet said Carney campaigned during the election on finding a way out from under Trump's tariffs but has nothing to show for it so far.
In a social media post, Blanchet said Carney's government "made significant compromises on defence, borders and counter-tariffs, and now it is backtracking on a widely supported measure to protect culture, still with nothing to show for it — no gains or progress for Quebec and Canada, neither on tariffs nor on trade.
"This is deeply concerning," he said.
Interim NDP Leader Don Davies also sounded off on social media, saying the decision to end the digital services tax amounts to "pure caving in to Trump and his billionaire friends."
"Canada is a sovereign country with the right to make our own tax laws. Abandoning fair taxation of tech giants is unacceptable appeasement," Davies said.
Davies said that, coupled with Carney's openness to Trump's "Golden Dome" missile defence plan and his sprint to meet the new 5 per cent NATO defence spending benchmark, "it’s looking more & more like Mr. Carney had his elbows up during the pre-game skate — only to drop them once the game started."
However the Canadian Chamber of Commerce called the decision to drop the tax a "savvy" one.
"This tax would have fallen on Canadian consumers, businesses and investors in the form of higher costs and hurt our economy at a critical time," David Pierce, the chamber's vice-president of government relations, said in a media statement.
He said ending the tax "moves us one step closer to a renewed, reliable trade deal" with the United States.
Rick Tachuk, president of the American Chamber of Commerce in Canada, said the withdrawal of the tax was a "welcome" move by the Canadian government.
"This is a constructive decision that allows both countries to focus on strengthening their economic partnership. Businesses on both sides of the border rely on policies that support certainty, collaboration, and long-term growth," he said in a media statement.
This report by The Canadian Press was first published June 30, 2025.
Anja Karadeglija and David Baxter, The Canadian Press
