Canada restarts trade talks with US after scrapping tax that halted discussions

The US and Canada have agreed to resume trade talks nearly 48 hours after negotiations ground to a halt between the two countries over the implementation of a digital tax, the Department of Finance Canada said in a statement.

With Canada as the largest US trading partner, and a key supplier of aluminum, steel, lithium, natural gas, timber and other commodities, billions of dollars of trade are at stake.

Canada announced on June 29 the country would be rescinding its digital services tax to restart trade negotiations after President Donald Trump said he would terminate discussions on June 27.

The two countries have been engaged in a tense trade dispute since President Donald Trump launched tariffs against Canada in March. The two countries had agreed to 30 days of talks, until Trump cut off discussions in a June 27 Truth Social post in which Trump named the "egregious tax" as an attack on the US. Trump also promised to announce new tariffs on the country within seven days.

Canada's reversal of the tax, which imposes a 3% rate on large foreign and domestic digital companies that make over C$20 million in revenue, is "in anticipation of a mutually beneficial comprehensive trade agreement with the United States," the Department of Finance Canada said.

Canadian Prime Minister Mark Carney and Trump have agreed to resume negotiations and are working toward a July 21 deadline for reaching a deal, according to the Department of Finance Canada.

"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 said in a June 29 statement.

The White House declared victory.

"President Trump has once again leveraged the power of the American economy, the best and biggest in the world, to deliver a victory for American industries and workers," Kush Desai, a White House spokesperson, said in a statement.

The US and Canada had begun a 30-day negotiation period after leaders of both countries met in mid-July at the G7 Leaders' Summit.

"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," François-Philippe Champagne , Canada's minister of finance and national revenue, said in a statement.

US Commerce Secretary Howard Lutnick praised Canada's reversal on the tax in a June 30 post on X.

"Thank you Canada for removing your Digital Services Tax which was intended to stifle American innovation and would have been a deal breaker for any trade deal with America," he wrote.

Canada is seeking to ease a 25% tariff on goods not covered by the US-Mexico-Canada Trade Agreement and to reduce a 10% tariff Trump imposed on imports from all countries.

Trump had excluded raw energy and most metals commodities from the tariffs he imposed earlier, though the administration separately imposed a 50% tariff on aluminum and steel, two commodities the US buys from Canada.