Canadian Prime Minister Mark Carney and U.S. President Donald Trump have both agreed to resume trade talks. This decision comes on the heels of a tumultuous period punctuated by sky-high tariffs and bills seeking to tax technology companies. This deal is announced right as Trump prepares to head to Canada for the G7 meeting in Alberta. There, trade talks are expected to take the spotlight.
In recent months, tensions escalated between the two countries when Trump imposed hefty tariffs on Canadian goods, including a 50% tariff on steel and aluminum and a 25% tariff on automobiles. The situation worsened when Trump announced the suspension of trade talks over Canada’s plans to tax U.S. technology companies, describing the tax proposal as “a direct and blatant attack on our country.”
The two leaders had spoken on the phone as recently as Sunday, during which they discussed the trade impasse. Immediately after their conversation, Carney announced that Canada and the U.S. had indeed agreed to a 30-day deadline to return to the negotiating table. Canada’s move to cancel its plan for a highly controversial digital services tax is historic. This new tax, which is meant to take effect this coming Monday, would have dropped a $2 billion liability on U.S. businesses due retroactively at the end of this month.
“This announcement will support a resumption of negotiations toward the July 21, 2025, timeline set out at this month’s G7 Leaders’ Summit in Kananaskis,” stated Mark Carney.
Political pundits have responded positively and negatively to Carney’s decision to rescind the tax. Reaction from Canada’s Finance Minister, François-Philippe Champagne The Minister stated that this step will accelerate ambitious change. It’s ambitious plan appreciates that the future of Canada’s economic and security relationship lies with the United States. He emphasized that “rescinding the digital services tax will allow the negotiations of a new economic and security relationship with the United States to make vital progress.”
Political science professor Daniel Béland described Carney’s retreat as a “clear victory” for Trump. He thinks it’s a good faith attempt to court the new occupant of U.S. President’s mansion, and to do right by big technocrats.
In hindsight, this might have been necessary to buy time for the negotiations for a new Canada-U.S. trade agreement. Now, Prime Minister Carney has been forced to act to mollify President Trump, winning a respite from him by promising to re-start those negotiations. This has previously been a clear win for the White House and big tech. Béland stated.
Béland noted that “President Trump forced PM Carney to do exactly what big tech wanted. U.S. tech executives will be very happy with this outcome.”
With the G7 summit approaching, the two countries intend to continue their talks. Their goal is to address the 301 tariffs that Trump first imposed, looking to lower temperatures. What happens in these negotiations will very much shape America’s trade relations going forward.
