Canadian Prime Minister Mark Carney has confirmed his government will not proceed with its planned digital services tax, a significant victory for major US technology companies that stood to pay billions under the levy. The decision, hailed by the White House as a capitulation, clears the path for the resumption of stalled trade talks between Canada and the United States.
The proposed tax, which targeted the Canadian revenues of tech behemoths like Google, Amazon, and Meta, was designed to ensure fair taxation from companies that generated substantial income within Canada’s borders but often paid little in local corporate taxes. The first payments were slated for Monday, signaling a new era of digital taxation.
However, the tax drew strong opposition from the Trump administration, with President Trump himself threatening to terminate all trade discussions unless the levy was withdrawn. White House Press Secretary Karoline Leavitt stated that Prime Minister Carney “caved” to these demands, underscoring the effectiveness of the US’s assertive posture.
While Canadian business groups have welcomed the move, citing potential negative impacts on consumers and the economy, critics within Canada argue that the government has overplayed its hand and forfeited significant revenue. The episode highlights the intricate balance between national fiscal policy and international trade relations.