Canada withdraws digital tax that angered Trump to restart US trade negotiations

Canada will rescind a planned digital services tax in order to advance stalled trade talks with the U.S., Ottawa announced on Sunday. 

The tax on the revenues produced by Canadian online users, which was due to go into effect on Monday, angered Donald Trump, with the American president calling it “a direct and blatant attack” on the U.S. Trump terminated trade talks with Canada on Friday, blaming the "egregious" tax.

Referring to Canada, Trump wrote on Truth Social on Friday: “They are obviously copying the European Union, which has done the same thing, and is currently under discussion with us, also."

After his government folded on the tax, Canadian Prime Minister Mark Carney and the Trump administration agreed to resume trade talks, aiming to reach a deal by July 21, according to Canada’s Department of Finance. 

Trump has repeatedly railed against “non-tariff barriers” imposed by other countries — particularly regulations and taxes on the tech industry. 

Britain’s digital services tax caught Trump’s attention, though Britain’s trade secretary told POLITICO last week that reducing it is not part of ongoing U.S.-U.K. trade talks.

POLITICO and other outlets reported last week that Europe has indicated it’s willing to be flexible on the Digital Markets Act to clinch a trade deal with Washington. But in comments published Monday, EU competition chief Teresa Ribera pushed back. 

“We will not compromise … around sovereignty and around regulation on how to work in our own market,” Ribera told The Capitol Forum, per excerpts from an interview seen by POLITICO.

With a July 9 deadline looming — and U.S. tariffs set to kick in — major EU players are split over whether to rush a deal or hold firm to secure better terms.