TORONTO — The White House asserts that Canadian Prime Minister Mark Carney “caved” to pressure from President Donald Trump, leading to Canada’s decision to withdraw its controversial digital services tax (DST) on major U.S. technology companies.
White House Press Secretary Karoline Leavitt stated that Prime Minister Carney contacted President Trump on Sunday evening to confirm the tax would be dropped. This move came after Trump halted trade talks on Friday, labeling the DST a “blatant attack” and threatening to escalate tariffs.
Speaking to reporters in Ottawa, Carney indicated the rescinding of the tax was “part of a bigger negotiation,” confirming that trade discussions between Canada and the U.S. resumed on Monday. Canada had previously announced it would halt the collection of payments for the tax, which were due on Monday, and introduce legislation to formally scrap it.
White House economic adviser Kevin Hassett confirmed the resumption of trade talks, which have been strained since Trump’s return to office. Leavitt emphasized that President Trump’s negotiating prowess ensures that “every country on the planet needs to have a good relationship with the US,” hailing the tax’s removal as a “big victory for our tech companies and our workers here at home.”
Canada’s DST would have imposed a 3% charge on Canadian revenues exceeding $20 million for U.S. tech giants such as Amazon, Meta, Google, and Apple. Canadian Finance Minister François-Philippe Champagne released a statement Sunday confirming the tax would be rescinded, explaining that the DST, announced in 2020, aimed to ensure large tech companies paid taxes on revenues generated from Canadians. He added that Canada’s preference has always been a multilateral agreement on digital services taxation.
Pierre Poilievre, leader of Canada’s opposition Conservative Party, criticized the “11th hour” decision to scrap the tax. In a post on X, he suggested that Carney, who had campaigned on an “elbows up” approach to defending Canadian interests, had “put his elbows down.” Poilievre urged Carney to “insist that the US immediately rescind softwood lumber tariffs” in exchange, emphasizing the need for gains for Canadian workers.
U.S. Commerce Secretary Howard Lutnick also took to X on Monday morning, thanking Canada for dropping the tax, calling it a levy “intended to stifle American innovation and would have been a deal-breaker for any trade deal with America.”