Carney caved to Trump, White House says; trade talks resume

WASHINGTON - The White House confirmed the resumption of trade negotiations with Canada on Monday, after Ottawa announced the elimination of the digital services tax (DST) affecting large U.S. technology companies.

White House economic adviser Kevin Hassett told Fox News today that negotiations will "absolutely" resume following the Canadian government's announcement Sunday night.

Hassett added on CNBC that, following Canada's reversal, other countries will follow suit.

"My expectation is that taxes on digital services will be eliminated worldwide, and that this will be a key part of the ongoing trade negotiations we are conducting," he said.

White House spokeswoman Karoline Leavitt said the withdrawal of the tax "is a huge victory" for American technology companies and their workers.

"Prime Minister (Mark) Carney, in Canada, caved in to President Trump and the United States of America. And President Trump knows how to negotiate, and he knows he's running the greatest country and the greatest economy in the world, on this planet, and that every country on the planet needs to have good trade relations with the United States," he explained during a press conference.

. @PressSec Karoline Leavitt on Canada dropping its digital services tax: "It's very simple. Prime Minister Carney and Canada caved to President Trump and the United States of America." pic.twitter.com/V3sfDPnSrP

— CSPAN (@cspan) June 30, 2025

Leavitt revealed that Carney called Trump on Sunday night “to inform him that the tax would be withdrawn.”

"It was a mistake for Canada to promise to implement this tax, which would have hurt our tech companies here in the United States," he concluded.

On Sunday, Canada's Department of Finance announced the repeal of the digital services tax, which was scheduled to take effect this Monday.

The Canadian decision came after US President Donald Trump unexpectedly announced the breakdown of trade negotiations between the two countries on Friday.

“We have just been informed that Canada, a very difficult country to TRADE with, including the fact that they have charged our farmers tariffs of up to 400% on dairy products for years, has just announced that they will be taxing our tech companies on digital services, which is a direct and blatant attack on our Country,” Trump said, despite the tax having been passed in 2024.

The digital services tax, which Canada wanted to implement retroactively from 2022, was intended to impose a 3% tax on revenues over $20 million that companies earn from digital services directed to Canadian residents.

Yesterday, the Canadian government recalled that in 2020, it announced the DST to address the fact that “many large technology companies” operating in Canada do not pay other taxes on profits earned from Canadians.

You might also be interested in : “ US remittance tax would go from 3.5% to 1%, says Claudia Sheinbaum ”