Update: Canada CAVES TO TRUMP On Digital Services Tax
Today, June 30th , was supposed to be the day that digital services offered by the likes of Amazon, Meta, Google and Uber would face a levy on revenues generated from Canadian users.
The 3 percent tax would have been retroactive, meaning companies must pay on revenues going back to January 1, 2022.
Instead, the government of Mark Carney caved in to demands by Donald Trump to cancel the tax, after he threatened to call off trade talks in retaliation,
I am personally very disappointed by Carney’s decision. This will not help him in future talks with Trump; success only propels Trump forward. I am not alone; Canadian tech journalist Paris Marx said that Carney’s decision shows Trump that “Canada can be pushed around”.
Carney and Trump will now resume trade negotiations with a view towards agreeing on a deal by July 21st.
Carney said that “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.” He added that rescinding the tax would “support a resumption of negotiations.”
Which it may well do…but in my view, Canada is now negotiating from the position of a known crumbler and push-baby.
Other nations in Europe have stood up to Trump on this; I am most disappointed in Carney and his view of how negotiations should be moved forward.
Mondays. What can I say?
Here is my take. This isn’t insider information. It’s based on what’s already public knowledge.
Under the previous Liberal government, Canada’s Digital Services Tax (DST) was designed as a fallback plan while Trudeau worked to join the OECD digital enforcement framework. That wasn’t likely to happen - so the DST was created as a safety net.
But since Mark Carney aligned Canada more closely with Europe and signaled deeper integration with international digital trade frameworks, the picture has changed.
Now, instead of relying on a Canada-only DST, the smarter, and potentially much tougher, option is to finalize enforcement through the OECD and key allies like the EU.
The question is: how would Canada even collect the tax if the DST kicked in today? And if there’s typically a 30-day grace period for payment, what happens if the OECD-based framework starts in three weeks?
You’d have mailed out DST statements today, allocated staff, and burned programming resources, only to cancel it all on day 21.
This feels less like a surrender to Trump and more like a case of awkward timing. The DST wasn’t Carney’s idea - it was Trudeau’s backup plan. And it was in the way.
Why wasn’t it shut down sooner? Because just weeks ago, Canada was still in talks about aligning with the EU. You don’t kill your backup plan when you’re not sure if the main one will close.
It could easily take three weeks to reconfigure Canada's systems to integrate with OECD protocols. That’s a standard window for mirroring digital infrastructure around the globe.
And Carney, as Canada’s chief negotiator, can’t publicly broadcast every move in those talks. If allies think their early positions will be leaked or misinterpreted, they stop talking freely.
Here’s the key thing: Trump gave Carney 30 days. So why is Carney pushing for 21?
It’s not backtracking. It looks more like a recalibration. A shift away from a local tax toward a global enforcement strategy that’s harder to dodge, tougher to game, and far more enduring.
Very disappointing indeed! Trump and the oligarchs win again. Maybe Canadians need to boycott all the companies not willing to pay taxes here.