Canadian Prime Minister Mark Carney said late last night that trade talks with the United States (US) are continuing after Canada withdrew its plan to impose taxes on American technology companies.
US President Donald Trump said on Friday he was suspending trade talks with Canada over its plans to impose tariffs on American technology companies, calling the Canadian move a direct and flagrant attack on the United States.
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The Canadian government announced last night that, pending a trade agreement, Canada will withdraw its Digital Services Tax, which was set to take effect today.
Canadian Prime Minister Carney and Trump spoke by phone yesterday, and Carney's office said they agreed that trade talks would continue.
"Today's announcement supports the continuation of negotiations with the target date of July 21, 2025, set at this month's G7 leaders' summit in Kananaskis, Canada," Carney said in a statement.
Carney visited Trump at the White House in May, where he was polite but firm, the AP reports.
Trump was in the Canadian state of Alberta for the G7 summit, when, according to the Canadian prime minister, that country and the US set a 30-day deadline to complete trade negotiations.
In a social media post on Friday, Trump said Canada had informed him that it was standing by its intention to impose a digital services tax, which would apply to Canadian and foreign businesses that do business with online users in Canada.
The digital services tax was supposed to hit companies like Amazon, Google, Meta, Uber, Airbnb with a 3 percent tax on revenue from Canadian users. It was supposed to be applied retroactively, and the American companies would have to pay $2 billion by the end of the month.
Canadian Finance Minister Francois-Philippe Champagne spoke with US Treasury Secretary Scott Besant on Sunday.
"Waivering the digital services tax will allow for important progress in negotiations on a new economic and security relationship with the United States," said Canada's finance minister.
Canada and the US are discussing easing a series of high tariffs on various goods that Trump has imposed on its neighbor.
Trump has imposed tariffs of 50 percent on steel and aluminum and 25 percent on cars. He has also imposed a 9 percent tariff on imports from most countries, and could raise those tariffs after July 90, when a XNUMX-day negotiation period he has set expires.
Canada and Mexico have separate tariffs of as much as 25 percent that Trump imposed citing the need to stop fentanyl smuggling, although some products are still protected under the 2020 US-Mexico-Canada Agreement signed during Trump's first term.
Daniel Beland, a political science professor at McGill University in Montreal, said Carney's withdrawal was a "clear victory" for Trump, and that Trump had forced Carney to do exactly what big tech companies wanted.
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