The United States will resume trade talks with Canada after Ottawa dropped its planned digital services tax targeting major U.S. technology companies, White House economic adviser Kevin Hassett said on Fox News Channel on Monday.
Hassett confirmed that negotiations would restart immediately. The announcement came just hours before Canada was scheduled to begin collecting the 3% tax on digital services revenue from large U.S. firms, including Amazon, Meta, Google, and Apple.
Canadian Prime Minister Mark Carney informed President Donald Trump about the decision during a phone call on Sunday evening. White House press secretary Karoline Leavitt called it a win for U.S. tech firms and credited Trump’s hard-line trade approach.
Trump had raised the issue at the G7 summit in Canada earlier in June, urging Carney to withdraw the tax.
The tax, which would have been retroactive to 2022, was halted as both governments agreed to resume talks and aim for a new trade deal by July 21. Canada’s finance ministry said legislation would be introduced to repeal the Digital Services Tax Act.
Trump had suspended talks last Friday, calling the tax a “blatant attack.” On Sunday, he warned of setting new tariff rates on Canadian goods within a week if the tax was not withdrawn.
U.S. Commerce Secretary Howard Lutnick welcomed the move, calling it important for maintaining progress in trade talks. Treasury Secretary Scott Bessent, speaking to Bloomberg Television, said he expects several deals before a July 9 deadline, after which U.S. tariff rates are set to rise to between 11% and 50%.
He added that extensions beyond the deadline would depend on Trump’s decision.
Leavitt said Trump would meet with his trade team this week to set tariff rates for countries not actively negotiating.
Wall Street stocks rose Monday as investor sentiment improved on hopes of successful trade discussions.
Canadian business groups supported Carney’s decision, saying the tax would have led to higher costs for consumers and slowed economic growth. But critics, including members of the opposition, said the move contradicts Carney’s campaign pledges to stand up to Trump.
Canada is the second-largest U.S. trading partner after Mexico and the biggest buyer of American exports. Last year, Canada imported $349.4 billion in goods from the U.S. and exported $412.7 billion, according to the U.S. Census Bureau.
