Canada rescinded its Digital Services Tax (DST) on Monday to support complex trade negotiations with the United States, reversing a policy that had triggered market volatility and threatened bilateral relations.
What Happened: Finance Minister François-Philippe Champagne announced the decision following Prime Minister Mark Carney‘s agreement with President Donald Trump to resume negotiations toward a comprehensive deal by July 21.
The move halts the scheduled June 30 collection and will require new legislation to formally repeal the Digital Services Tax Act.
The DST, announced in 2020, targeted large technology companies generating revenue from Canadian users who might otherwise avoid taxation.
Trump had halted trade talks on Friday after Canada announced the digital tax, calling it “a direct and blatant attack” on American technology companies. His Truth Social post triggered sharp market reversals, with the S&P 500 tumbling 52 points from record highs. Major tech stocks including Coinbase Global Inc. (NASDAQ:COIN), Enphase Energy Inc. (NASDAQ:ENPH) and Palantir Technologies Inc. (NYSE:PLTR) declined 7.1%, 6.9%, and 4.5% respectively.
See Also: China’s Ant Group Boosts R&D Spending To Record $3.26 Billion In 2024 Amid AI Push
Why It Matters: Currency markets reflected the tension as the Canadian dollar weakened from 1.3670 to 1.3750 against the U.S. dollar. The iShares MSCI Canada Index Fund (NYSE:EWC) fell nearly 1% to $45.39.
“Canada’s new government will always be guided by the overall contribution of any possible agreement to the best interests of Canadian workers and businesses,” Carney stated. The Prime Minister emphasized that rescinding the digital tax supports negotiations toward their agreed timeline.
Trump had previously declared the deal “achievable” during G7 meetings, despite philosophical differences on tariff approaches.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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