Trump cuts off US trade talks with Canada over Canada’s digital services tax

CBC    June 27, 2025

June 27, 2025:  U.S. President Donald Trump ends trade talks with Canada ‘effective immediately’ over Canada’s digital services tax. The RCMP investigates an explosion outside the office of a B.C. provincial cabinet minister. And, the Toronto Raptors turf Masai Ujiri. 

What is Canada's digital services tax — and why does Trump dislike it so much?

Canada's digital services tax (DST) affects mega companies that offer digital services — like online advertising or shopping — and earn more than $20 million in revenue from Canadian sources. Giant companies like Amazon, Apple, Airbnb, Google, Meta and Uber will be taxed three per cent on the money they make from Canadian users and customers.

The levy has been in place since last year, but the first payments are due starting Monday. It's retroactive to 2022, so companies will end up with a $2-billion US bill due by the end of July.

Revenue is one big benefit. The Parliamentary Budget Office estimated last year that the tax would bring in more than $7 billion over five years. 

The Liberals first promised the tax during the federal election in 2019 under former prime minister Justin Trudeau, but it was delayed for years because a number of other nations wanted to work together on one, overarching digital taxation plan that could be applied in multiple countries.

As the delays dragged on, Canada went ahead with its own tax plan. 

Aside from revenue, Ottawa has pitched the DST as a way to bring the tax code up to date and capture revenues earned in Canada by firms located abroad.

What is the U.S. stance on the tax?

The United States has been hostile to the tax from the beginning because it largely affects American tech giants. Officials have argued the tax discriminates against American companies and Congress, notoriously divided between Democrats and Republicans, found a moment of common ground in criticizing Canada's plan. 

The Computer & Communications Industry Association has estimated U.S. companies could pay as much as $1 billion a year in tax if the measure remains on the books.

A number of industry experts — from lawyers to cross-border groups and commerce associations — have warned for years that the tax would strain the relationship between Canada and the U.S., with one going so far as to predict in 2023 that the tax alone would be to blame for a trade war.