Ottawa - Agencies

The Canadian government has officially announced the cancellation of its plans to impose a digital services tax, which sparked severe tensions with the United States and threatened to ignite a trade war between the two countries.

The proposed tax was aimed at giant technology companies such as Google, Amazon, and Meta, by imposing a 3% fee on their revenues generated from digital ads and transactions involving Canadian users.

The Canadian Ministry of Finance stated that the tax was originally approved to "ensure fairness in the tax system," but Washington's strong opposition to the move—claiming that it unfairly targeted American companies—prompted Ottawa to backtrack.

U.S. officials indicated that this tax would harm shared economic interests and considered it a "discriminatory measure" that threatens to undermine trade negotiations between the two countries.

The cancellation came after intensive negotiations lasted for months, against the backdrop of the Trump administration threatening to impose retaliatory tariffs on major Canadian exports if Ottawa proceeded with the tax.

Canada is currently seeking to resume trade talks with the United States on July 21, amid hopes that the cancellation of the tax will remove one of the largest sources of tension between the two sides.