The Canadian government announced late Sunday that it would scrap the tax on U.S. tech firms that was set to take effect Monday in a bid to bring the Trump administration back to the table and avoid heightened tariffs in the coming weeks.
The move was successful for Ottawa, with the White House saying that trade talks would resume immediately. It was also cheered by the tech industry, which has lambasted digital services taxes as “unfair” and “discriminatory.”
But experts say Canada’s move could put pressure on other nations to follow suit and rescind their tech taxes.
“Going forward, I think the fact that Trump managed to bully or cajole Canada into dropping its [digital services tax] means that this will be a big item that he insists on in talks with Europe and any countries in all these trade negotiations,” said Gary Hufbauer, a nonresident senior fellow at the Peterson Institute for International Economics.
“I see this as a harbinger of a more general repeal of digital services taxes,” he added, calling it a “pretty big deal and a real victory for Trump.”
Since taking office for a second time, Trump has repeatedly criticized taxes and fines on U.S. tech firms. He slammed the European Union (EU) in January, alleging that the bloc’s hefty fines against American companies amount to a “form of taxation.”
The EU’s top court ruled in September that Apple owed more than $14 billion in back taxes to Ireland, while upholding a $2.7 billion fine against Google by European antitrust regulators.
Meta, the parent company of Facebook and Instagram, was also fined about $840 million for antitrust violations in November. The social media giant was hit with another $228 million fine in April, alongside Apple, which faced a $570 million penalty.
Trump railed against the EU during a meeting with the NATO secretary-general in March, calling the European bloc “nasty” over the tech fines, as well as a tariff on U.S.-made cars.
“They’re suing Google, they’re suing Facebook, they’re suing all of these companies, and they’re taking billions of dollars out of American companies,” he said at the time.
The president has also taken aim at digital services taxes in particular, signing an executive order in February slamming the taxes as “designed to plunder American companies” and declaring that the U.S. would respond to such measures with tariffs or other actions.
Check out the full report at TheHill.com first thing Monday.
