Canada Capitulates: Will Scrap Digital Services Tax, Restart Trade Talks
“So revenues collapsed in Canada during his [Trudeau’s] 10-year reign, and now [Prime Minister Mark] Carney has no income. … So, he’s trying to find any way he can to make income.”
Well, that was fast.
In a late Sunday news release, the Canadian Department of Finance announced it was rescinding the Digital Services Tax “in anticipation of a mutually beneficial comprehensive trade arrangement with the United States.”
“Consistent with this action, Prime Minister Carney and President Trump have agreed that parties will resume negotiations with a view towards agreeing on a deal by July 21, 2025.”
The Department added that the “June 30, 2025 collection will be halted” and the finance minister will advance legislation to rescind the Digital Services Tax Act.
Canadian government ignored repeated warnings of DST risks only to cave at the last minute. Walking away from estimated $7.2 billion in tax revenue with only restarting negotiations that were on until government overplayed its hand to show for it. Brutal.https://t.co/dJbEsLgTUu pic.twitter.com/ZWbdQhR5Pu
— Michael Geist (@mgeist) June 30, 2025
In a Friday afternoon post on Truth Social, President Trump declared he was “terminating” trade talks with Canada “effective immediately.” The reason, he said, was that Canada had placed a “Digital Services Tax on our American Technology Companies, which is a direct and blatant attack on our Country.” He added that we will notify Canada within the next week “the Tariff that they will be paying to do business” with the U.S.
I reported on this story here.
— Katie Pavlich (@KatiePavlich) June 27, 2025
The Canadian government first floated the idea of the DST in 2020 under then-Prime Minister Justin Trudeau. It was enacted in 2024 and would be applied retroactively to 2022.
The first payment to Ottawa — estimated at $7.2 billion — was scheduled for June 30.
The Canadians felt that large companies, regardless of where they were headquartered, should “pay a 3% tax on revenue earned from engaging with online users in Canada if they meet certain conditions.”
The tax would have hit U.S. technology giants hardest, including Meta, Apple, Google, Amazon, and Microsoft.
The DST did not originate in Canada. Several countries in Europe currently charge this tax. The Trump administration considers it a “non-tariff trade barrier” and is seeking to eliminate it in its final deals with those nations.
If Trump’s termination of trade talks “effective immediately” on Friday seemed sudden, it was because he had left the mid-June G7 summit with a distinctly different understanding of the status of the tax. He believed the U.S. and Canada had agreed on a 30-day grace period during which negotiations would continue. When the DST was presented as a fait accompli, Trump was angry and abruptly walked away from the table.
Canada’s quick capitulation proves that Trump’s take-no-prisoners strategy worked. That said, Canada is America’s second-largest trading partner (after Mexico), and a strong U.S.–Canada trade relationship is invaluable to both nations.
Canadian businessman Kevin O’Leary told Fox & Friends on Saturday that the DST “was bad policy then” — when first introduced under Trudeau, whom he refers to as the “idiot king” — “and it remains bad policy now.” He added some important perspective and context to the situation.
Trudeau was thrown out after he impoverished 25% of the Canadian population, wiped out GDP, [and] buried the country in debt because of one policy called Bill C-69 which doesn’t allow development of any energy … it’s a no pipeline bill. So revenues collapsed in Canada during his 10-year reign, and now [Prime Minister Mark] Carney has no income. … So, he’s trying to find any way he can to make income. This [the DST] is worth $7 billion to the Canadian economy, but obviously, it’s not going to work out the way he planned.
Now, he [Carney] may just be testing it, but he doesn’t have a lot of options because Canada’s economy has been wiped out by the idiot king, and he’s got to fix it.
…
Canada has the raw resources, the unlimited nat[ural] gas, unlimited oil, unlimited rare earths, unlimited minerals, and the U.S. is the largest market.
So what, are we all idiots? Why do we have tariffs in either direction? There should be no tariffs whatsoever. We should bulk up and then fight off the Chinese.
Elizabeth writes commentary for Legal Insurrection and The Washington Examiner. She is an academy fellow at The Heritage Foundation. Please follow Elizabeth on LinkedIn or X.
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Comments
Carney loves the tax because he is a big government, WTO European. He could have gotten Away with the tax under Harris as Biden had nothing to say about it. Trump doesn’t play that game. Carney is used to bullying Europeans and weak skinned Democrats. Sucks he now runs a third rate country. It’s tough to negotiate from a position of weakness and whining Trump is a meany won’t get him anywhere
It’s a shame Canada has become a third rate country. I’m old enough to remember the CDN$ being $1.06 to the US dollar, not – what? – 78 cents? A real aircraft industry. A people who were proud of their nation and had a can-do attitude now only found in two or three provinces and territories.
For those following along at home: I got my pacemaker Friday, released Saturday, and I feel quite good. Noticing some changes already. I think I will be fine. Just not looking forward to any possible adjustments at my followup. That little tiny screwdriver they stick in to make the adjustments sounds painful
Glad it went well. Wishing you the best in the future.
Thanks, Paula.
good luck and stay as healthy as possible
venting on li is probably good for your stress level
It wasn’t so much stress level as the fact I’m old.
Your correct of course. Canada was not always a third rate country. Growing up on the border I certainly remember all the Canadian’s who crossed to shop here because of their strong dollar. I also remember 25 years or so later when it hit about 70 cents against ours and the amount of lumber I bought up there. They also waived their tax on it to get Americans into Quebec and buy stuff. Buy the lumber, stop at the outgoing Duty Free and give them the receipt and they would hand you the money. Canadian of course but since I was going back it didn’t matter to me.
The phrase – Peace Through Strength – is most often used in military settings. But, as here, it also applies in commerce.
Trump is a leader, an American leader.
Of note is the timing of the capitulation press release. After Trump called off trade negotiations late last week, the Canadian finance minister publicly said the tax would still go into effect today. Rah-rah, we’re standing up to the Americans, go Canada – broadcast all over the Canadian media.
The press release came late last night. Tomorrow is Canada Day. A lot of people are taking 4-day long weekends or even longer vacations. So what did they do? The holiday news dump: Wait until the last minute and announce defeat as quietly as possible.
Canada is doing so many things to hurt itself. Here we are on the other side of the border with uses for their natural resources and they actually tie one hand behind their own backs. The name of the oil pipeline section that Trump started building in his first administration escapes me (somebody help me out here) but completing that would seem to be the first place to start, then go on to build more so we wouldn’t have to rely so much on overseas shipments.
If Canada wants to have cordial relations with the neighbors, they need to get out of their own way first.
.
NM – the Keystone pipeline. Is that still a go?
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Leftists/Neo-Communists/Socialists/Dhimmi-crats are a fiscally illiterate and destructive cancer, no matter what country they govern.
Note to foreign leaders – don’t mess with DJT especially when it comes to tariffs. On the home front, Americans will figure out that while some may think that DJT is an S.O.B., he is our S.O.B. and the world can go suck on lemons.
That didn’t take long at all. Carney is such a tool just like the previous tool. Are you taking notes Canada? Probably not.
Never mind making Canada state. Let’s make them a protected territory. They can work hard at rising to become a state.
Canada has fallen far I’m afraid. Immigration hasn’t helped them either although it isn’t unrestricted.
Did this pass parliament? Did parliament repeal it? Isn’t Canada supposed to be some sort of democracy?
It was announced in 2020 but Parliament did not pass legislation to implement it until last year. Part of last night’s announcement halting it starting today includes that legislation will be introduced to repeal the law when Parliament returns.
Almost like Canada is a minor bit player economically and they need us exponentially more than we need them.
They bought the stupid propaganda of Trump ‘chickening out’ and actually thought they had the leverage to make demands.
So now they’ve been forced to rescind this insane law as a condition of simply continuing the talks that they were already engaging in.
But hey, at least they ‘showed us’ by electing the ‘Anti-Trump’, eh?
“So what, are we all idiots? Why do we have tariffs in either direction? There should be no tariffs whatsoever. We should bulk up and then fight off the Chinese.”
That would be great news for the people and the corporations. But it doesn’t put a nickel in either government’s pocket, so it’ll never happen.
pound the maple leafs into syrup!
Down with Loonies and Toonies!
next candian power move:
justine to marry hillary
Part of the trade negotiation should force Canada to take back the losers they’ve foisted on us: Justin Bieber, Jim Carey, Neil Young, Samantha Bee,
Peter Jennings, Ellen Page, Seth Rogen, and the list goes on…..
I’d trade them all to get John Candy back.
Trudeau’s Deputy – Chrystia Freeland – froze bank accounts of anyone who gave money to the peaceful truck protests in Canada.. no court order.