FX.co ★ Canada Drops Digital Services Tax to Revive U.S. Trade Talks

Canada has decided to cancel its intended Digital Services Tax (DST), which was originally planned to be implemented retroactively from 2022, in an effort to rekindle trade discussions with the United States. This decision followed the termination of negotiations by President Trump on Friday, who described the DST as "a direct and blatant attack on our Country." In a statement released on Sunday, Canadian officials indicated that this change aims to "support those negotiations," with Finance Minister François-Philippe Champagne expressing optimism for achieving a "mutually beneficial comprehensive trade arrangement." Prime Minister Mark Carney and President Trump have agreed to restart discussions with the goal of finalizing a trade agreement by July 21, 2025. President Trump has consistently criticized DSTs, labeling them as "non-tariff trade barriers" that negatively impact U.S. businesses. Canada's reversal is perceived as a political triumph for Trump, who has accused allies of exploiting the U.S. and has, since reassuming office in January, threatened to impose a 25% tariff on all Canadian exports, exacerbating tensions between the two close trade partners.