US-Canada Trade Talks Resume, Trump Rules Out Extending Global Tariffs Pause
The US and Canada have resumed their trade talks after Ottawa walked back on its digital services tax that sparked a dispute with Washington.
In a separate development, the US President, Donald Trump, ruled out extending the July 9 tariffs deadline, before which countries should reach a deal with the US to avoid further trade penalties.
US-Canada Trade Talks
Late on Sunday, the Canadian Prime Minister, Mark Carney, said that Ottawa and Washington have resumed trade talks after Canada rescinded the digital services tax on American technology firms, reported the Associated Press (AP).
The Canadian Finance Ministry announced that “Canada would rescind the Digital Services Tax (DST) in anticipation of a mutually beneficial comprehensive trade arrangement with the United States.” As a result, Carney and Trump agreed to “resume negotiations with a view towards agreeing on a deal by July 21, 2025,” the ministry said in a statement.
Commenting on the announcement, Carney said: “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. 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.”
Digital Services Tax
Canada introduced the DST in 2020 to make large domestic and foreign technology companies pay tax on revenues generated from Canadians. It would impose a 3% levy on revenue from Canadian users on companies such as Amazon, Google, Meta, Uber and Airbnb, applying retroactively to 2022. The first payments were due to Monday, June 30, 2025, and would cost US companies an estimated $2 billion bill.
However, Canada said that the “June 30, 2025 collection will be halted.” On this occasion, the Canadian Finance Minister, François-Philippe Champagne, said: “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.”
US-Canada Dispute
In a surprise announcement, Trump on Friday said that the US had suspended trade talks with Canada over the DST, which he called a “blatant attack” on the US. “We have just been informed that Canada, a very difficult Country to TRADE with, including the fact that they have charged our Farmers as much as 400% Tariffs, for years, on Dairy Products, has just announced that they are putting a Digital Services Tax on our American Technology Companies, which is a direct and blatant attack on our Country,” he wrote on Truth Social.
Trump also threatened that he would impose new tariffs on Canadian goods. “Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately. We will let Canada know the Tariff that they will be paying to do business with the United States of America within the next seven day period,” he added.
In February 2025, Trump imposed tariffs on imports from Mexico, Canada and China, over the flow of drugs and undocumented immigrants from those countries to the US, prompting the countries to respond with retaliatory measures. However, Trump and Carney agreed to pursue negotiations to reach a new economic deal within a month period during the G7 Summit in mid-June.
Global Tariffs Pause
The US President has set July 9, 2025 as a date for countries to reach trade deals with the US to avoid facing more tariffs. Although his administration indicated that this deadline is flexible and could be extended, Trump ruled out extending the pause beyond July 9.
During an interview with Fox News on Sunday, Trump said he does not have plans for extending the pause on tariffs, adding that his administration will notify countries of trade penalties unless they reach an agreement with the US.
“We’ll look at how a country treats us — are they good, are they not so good — some countries we don’t care, we’ll just send a high number out,” he said.
Trump added that his administration will send letters to these countries before the deadline. These letters will say “Congratulations, we’re allowing you to shop in the United States of America, you’re going to pay a 25% tariff, or a 35% or a 50% or 10%,” Trump noted.
Trump’s Tariffs War
On April 2, Trump sparked a trade war by announcing stiff tariffs on all imports to the US. Trump’s move sparked fear across the world of an economic recession and higher inflation. As a result, Trump later suspended most of the tariffs for 90 days, set to expire on July 9.
In response, many countries have tried to negotiate with Washington, pursuing more balanced trade deals with the US. In the light of this, the UK became the first country to strike a trade deal with the US after Trump’s tariffs. Washington also reached a deal with Beijing that would speed up American firms’ access to rare earth minerals from China.
On Friday, the US Treasury Secretary, Scott Bessent, said that the Trump administration is engaged in trade talks with 18 top trade partners, including the European Union (EU) and India, adding that new deals could be finalized by the Labor Day holiday on September 1.
