Canada resumes trade negotiations with the US after eliminating taxes on technology companies.

Canada has resumed trade negotiations with the United States after reversing its intention to impose new taxes on American tech giants. This decision had led President Donald Trump to break off talks with the country last Friday.

Canadian Prime Minister Mark Carney confirmed this Sunday that Canada will return to the negotiating table following the elimination of the Digital Services Tax (DST) . "In our negotiation of a new economic and security relationship between Canada and the United States , the new Government of Canada will always be guided by the full contribution of any potential agreement to the best interests of the country's workers and businesses," the Canadian leader clarified to the media.

Canada's Department of Finance has announced in an official statement that it will rescind the Digital Tax (DST) in anticipation of a "mutually beneficial" trade agreement with the United States. This move comes after Finance Minister François-Philippe Champagne warned last week that the digital tax was still in effect and that the first payment, which affects large multinationals like Meta, was due this Monday, June 30.

Breakup of the United States

In this context, the US leader had broken off trade negotiations with Canada on Friday, effective immediately. Trump was demanding the tax be imposed on Canada, which would be applied retroactively to 2022 and amounted to 3% of revenues over $20 million that companies earn from digital services to Canadian residents. These companies would have been "forced to make a multi-million-dollar payment to Canada," the Computer & Communications Industry Association recently stated. "Today's announcement will support the resumption of negotiations by July 21, the date set at the G7 Leaders' Summit this month in Kananaski," Carney said.

The Canadian government has recalled that it announced the DST in 2020 to address the fact that "many large technology companies" operating in this country do not pay other taxes on the profits they earn from Canadians. While it has indicated that Canada's preference "has always been for a multilateral agreement " related to digital taxes, it will now rescind the law that created this tax.

Canada in the new Trump era

Since returning to the White House , Trump has sought to impose new tariffs on his partners in the United States -Mexico-Canada Agreement , citing trade deficits and the flow of drugs like fentanyl and migrants . Faced with the political shift, Carney has announced that negotiations for a new trade and security agreement between the two countries would begin in April.

Canada was exempt from some of the general tariffs Trump imposed on other countries, but it is under a separate tariff regime, being the largest foreign supplier of aluminum and steel to the United States. These raw materials are affected by other U.S. government customs measures.