The White House has accused Canadian Prime Minister Mark Carney of yielding to pressure from President Donald Trump by withdrawing a tax on major US technology companies. White House Press Secretary Karoline Leavitt stated that Canada erred in attempting to impose the tax and that Carney informed Trump of its removal. Carney clarified in Ottawa that the tax’s abandonment was part of broader negotiations, with trade talks between Canada and the US recommencing.
Describing the tax as a direct assault, Trump had terminated trade discussions and threatened tariff increases. In response, Canada suspended tax collections due on Monday and proposed legislation to eliminate the tax. Carney emphasized that dropping the tax was anticipated as part of a larger agreement, with White House economic adviser Kevin Hassett confirming the resumption of trade discussions between Washington and Ottawa.
Since Trump’s return to office, trade disputes between the US and its northern neighbor have been ongoing. The White House press secretary emphasized Trump’s negotiation prowess and the importance of maintaining strong relationships with the US. The removal of the tax was hailed as a significant victory for American tech companies and workers.
Canada’s digital services tax would have imposed a 3% fee on the revenue of US tech giants like Amazon, Meta, Google, and Apple exceeding $20 million. Finance Minister François-Philippe Champagne announced the tax’s revocation, citing the preference for a multilateral digital services tax agreement. Opposition leader Pierre Poilievre criticized the last-minute withdrawal, urging Carney to demand the repeal of US softwood lumber tariffs.
US Commerce Secretary Howard Lutnick praised Canada’s decision to scrap the tax, arguing that it would have hindered American innovation and jeopardized trade negotiations. Several countries, including the UK, are revising tax policies for multinational tech firms to address their global operations and tax structures.
The estimated impact of Canada’s tax on tech giants exceeded C$2 billion in the first year, with projections of C$5.9 billion in revenue over five years. The tax’s retroactive application from January 2022 was a point of contention. The move to drop the tax was aimed at restarting trade talks between the US and Canada, emphasizing the complexities of international trade relations and the influence of tech industry dynamics.
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