Canada has made a bold move. The Canadian government has scrapped its previous Digital Services Tax (DST) in a strategic effort to resume trade and security negotiations with the United States. Curiously, the tax was indeed a major obstacle. So, its removal has opened the door to renewed dialogue. Both sides now intend to reach a mutually beneficial agreement by July 21.

According to François-Philippe Champagne, Canada’s Minister of Finance, the government will suspend the DST collection scheduled for June 30 and will introduce legislation to repeal the Digital Services Tax Act, which had targeted large tech companies operating in Canada. The tax, introduced in 2020, had long been viewed by US authorities as a key barrier to broader trade negotiations.

This decision came just days after US President Donald Trump abruptly halted trade talks, calling the DST “a blatant attack.” In response, the Canadian government saw no choice but to pull the plug on the controversial tax.

“Eliminating the Digital Services Tax will allow negotiations on new economic ties and security cooperation with the United States to make critical progress,” Champagne stated.

Interestingly, Prime Minister Mark Carney and President Trump have agreed to quick-start negotiations aiming to reach a comprehensive deal that supports workers and businesses on both sides of the border. According to Carney, Canada is prepared to spend “as much time as necessary,” within reason, to finalize the agreement.