U.S. Commerce Secretary Howard Lutnick has thanked Canada for dropping its digital services tax in a move to resume trade negotiations with the United States.
“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,” Lutnick posted on social media Monday morning.
Ottawa announced late Sunday that it was dropping the tax following a phone call between Prime Minister Mark Carney and U.S. President Donald Trump.
The move came just before the first payment under the tax was set to come due for major tech companies like Amazon and Google.
Trump said Friday that the U.S. would be terminating all trade talks with Canada because of the tax.
He called it a “direct and blatant attack” on the U.S. and threatened Canada with another round of tariffs.
The Canadian Chamber of Commerce called the decision to drop the tax a “savvy” one.
“This tax would have fallen on Canadian consumers, businesses and investors in the form of higher costs and hurt our economy at a critical time,” David Pierce, the chamber’s vice-president of government relations, said in a media statement.
He said ending the tax “moves us one step closer to a renewed, reliable trade deal” with the United States.
Rick Tachuk, president of the American Chamber of Commerce in Canada, said the withdrawal of the tax was a “welcome” move by the Canadian government.
“This is a constructive decision that allows both countries to focus on strengthening their economic partnership. Businesses on both sides of the border rely on policies that support certainty, collaboration, and long-term growth,” he said in a media statement.
This report by The Canadian Press was first published June 30, 2025.
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