The United States will restart trade talks with Canada following Ottawa’s decision to abandon its planned digital services tax on American tech giants, White House economic adviser Kevin Hassett confirmed on Monday.
White House press secretary Karoline Leavitt told reporters that Canadian Prime Minister Mark Carney personally called President Donald Trump on Sunday night to inform him of the decision to scrap the tax, which she described as a significant win for U.S. technology companies.
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“Plain and simple, Prime Minister Carney backed down in the face of President Trump’s leadership,” Leavitt said, emphasizing Trump’s tough stance as a key reason behind Canada’s reversal.
According to Hassett, Trump had already pressed Canada to drop the tax during the G7 summit earlier in June. “They’ve had time to evaluate it, and now they’ve agreed — this clears the way for trade negotiations to resume,” he said.
The Canadian government announced late Sunday that it would suspend the digital tax—scheduled to go into effect Monday—in hopes of reviving stalled trade discussions with Washington. Both sides now aim to reach a trade agreement by July 21.
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U.S. Commerce Secretary Howard Lutnick praised the move in a post on X, saying, “Thank you, Canada, for withdrawing a tax that would have stifled American innovation. It was a clear obstacle to any potential trade deal with the U.S.”
Investor sentiment responded positively, with Wall Street markets hitting record highs on Monday morning, buoyed by renewed optimism around U.S. trade relations, particularly with Canada.
Meanwhile, Treasury Secretary Scott Bessent expressed confidence in the likelihood of multiple trade deals being finalized before a key July 9 deadline. After that date, U.S. tariffs on imports from various countries are set to revert to the elevated rates announced by Trump on April 2, ranging from 11% to 50%.
Speaking to Bloomberg Television, Bessent noted that while many countries are negotiating sincerely, they shouldn’t expect leniency beyond the deadline. “Whether extensions are granted will be entirely up to President Trump,” he said. “We hope to avoid reverting to higher tariffs, but if countries delay or resist, that’s still very much on the table.”
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