OTTAWA – Canada will proceed with a digital services tax (DST) on technology companies, which President Donald Trump called “a direct and blatant attack on our country” in a Truth Social post on Friday in which he said that his administration was “terminating ALL discussions on Trade with Canada effective immediately.”
On Friday, Canadian Prime Minister Mark Carney’s office issued a one-line response to the president’s announcement.
“The Canadian government will continue to engage in these complex negotiations with the United States in the best interests of Canadian workers and businesses,” it said.
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The first payment for the 3% DST is still due on Monday, which Canada’s Finance Department confirmed to Bloomberg News, and covers digital services revenue collected from Canadian users retroactively to 2022, amounting to about a $2 billion bill for such companies as Amazon, Meta and Google.
Last week, Canadian Finance Minister François-Philippe Champagne told reporters that the tax could be negotiated as part of broader U.S.-Canada trade discussions.
In a statement released on Friday, the Business Council of Canada said that it has long warned that “the implementation of a unilateral digital services tax could risk undermining Canada’s economic relationship with its most important trading partner, the United States. That unfortunate development has now come to pass.”
“In an effort to get trade negotiations back on track, Canada should put forward an immediate proposal to eliminate the DST in exchange for an elimination of tariffs from the United States,” said Goldy Hyder, president and chief executive officer of the council.
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Doug Ford, premier of Ontario – Canada’s largest province – has called for a “pause” in the implementation of the tax, which came into force last June.
“For our American partners, this is nothing but an unfair tax that’s putting millions of Canadian jobs at risk,” he said in a speech last October.
However, in an interview with Fox News Digital, Frank McKenna, a former Canadian ambassador to the U.S., said that Trump’s surprise declaration about ending trade talks with Canada reveals “how difficult this is going to be.”
“It’s an extraordinary action by a neighbor and trading partner, and it just demonstrates how unpredictable and chaotic the United States is under President Trump,” said McKenna, the current chairman of Brookfield Corp. and deputy chair of TD Securities.
Bloomberg reported on Friday that the DST will not affect the recent G7 agreement that resulted in the removal of the section 899 “revenge tax” proposal from Trump’s tax bill, according to the Canadian Finance Department.
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