You know you have an alpha dog leading the pack when all of the others, even the sometimes unruly ones, eventually fall into line due to strong leadership. And that’s President Donald Trump in a nutshell. Just two days of pressure from Trump and Canada has already caved in to his latest trade demands.
Officials with the Canadian government have now said they are going to back off implementing a Digital Services Tax that was going to be slapped on American tech companies selling their products and services in Canada, even if they don’t have an actual presence there.
U.S. Treasury Secretary Scott Bessent had asked Canadian Prime Minister Mark Carney to hit the pause button the tax while the two countries continued negotiations toward a long-term trade deal.
Here are more details from Trending Politics News:
The change comes after President Trump declared America holds “all the cards” in the negotiations and threatened Canada with a severe counteroffer if they did not withdraw the tax. Carney announced on Sunday that he will withdraw the tax “in anticipation” of a beneficial deal with Trump.
“Today’s announcement will support a resumption of negotiations toward the July 21, 2025, timeline set out at this month’s G7 Leaders’ Summit in Kananaskis,” Carney went on to say in the statement.
The tax, which was retroactive, dating back to 2022, was set to start collections on Monday, according to CNBC. It would have levied up to 3% in surcharges on business from U.S. behemoths like Amazon, Google, and Apple. Canada’s Minister of Finance and National Revenue, Francois-Philippe Champagne, added, “Rescinding the digital services tax will allow the negotiations of a new economic and security relationship with the United States to make vital progress and reinforce our work to create jobs and build prosperity for all Canadians.”
The finance ministry said in the statement that Carney “has been clear that Canada will take as long as necessary, but no longer, to achieve that deal.”
President Trump, as of this writing, has not yet responded to the news of Canada caving to his trade demands. On Friday, he issued a warning that he would “terminate” all trade negotiations with Canada if Carney didn’t pause the start of collections for the tax.
Trump referred to the tax as “a direct and blatant attack on our Country.”
Economic advisers for the president also balked at the proposed new tax.
“They’re taxing American companies who don’t necessarily even have a presence in Canada,” said White House National Economic Council Director Kevin Hassett remarked Friday afternoon, referring to the tax as “almost criminal.”
“They’re going to have to remove it,” he commented on the Digital Services Tax, Politico reported. “And I think they know that.” Later in the day, President Trump spoke with the press in the Oval Office and told reporters he holds “all the cards” in negotiations with the Canadian prime minister.
“We have all the cards. We have every single one. We don’t want to do anything bad, but … economically, we have such power over Canada. It’d rather not use it,” Trump explained.
At stake is a trade relationship valued at more than three-quarters of a trillion dollars. Trump has long complained that other countries like Canada benefit from a trade surplus over the U.S., meaning Canada sells more to Americans than it imports.
“In April, President Trump announced a ‘Liberation Day’ of new tariffs on dozens of countries around the globe, a dramatic attempt to reset trade relationships back in America’s favor. He had already slapped a 25% tariff on most Canadian imports shortly after taking office,” the article concluded.
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