"Canada rejects tax on US companies, after Trump's tariff threat; PM Carney announces business talks"
Canada withdraws decision on digital tax on American tech companies
Canada on Sunday (June 30, 2024) withdrew its decision to impose a digital services tax (DST) on American technology companies. The U-turn came just hours before the decision was to take effect. The move comes as a result of talks between Canadian Prime Minister Mark Carney and US President Donald Trump.
Trump's threat and negotiations
On June 27, Trump threatened on social media that if Canada imposes DST, the US will impose new tariffs on Canadian goods.
Carney said that negotiations on a trade agreement between the two countries will resume by July 21.
US Treasury Secretary Scott Besant said that the decision was necessary to avoid tariffs.
What is a Digital Services Tax (DST)?
This tax is applied at a rate of 3% on income from online services (such as social media, digital advertising, data sales).
It is applied only to companies with annual revenue of more than $ 800 million.
American companies like Meta, Google, Apple, Amazon could lose $ 2 billion annually.
Canada-US trade relations
Canada is America's largest buyer (purchased $ 349 billion in goods in 2023).
If there is a tariff war between the two countries, both will suffer economic losses.
Trump avoided some tariffs by implementing the USMCA agreement (free trade agreement) in 2020.
Trump's plan for a trade deal with India
Trump announced that a big trade deal is going to be done with India.
After the agreement with China, now negotiations are underway with India on similar terms.
Shares of Indian pharma companies have fallen due to plans to impose tariffs on the pharmaceutical sector.
Conclusion: Canada has withdrawn DST to avoid trade tensions with the US. This step has been taken due to Trump's threats and ongoing pressure for negotiations.
Article published | Mon | 30 Jun 2025 | 9:55 PM