The president blamed the move on Canada’s Digital Services Tax, which goes into effect on Saturday, and said he’d announce new tariffs.
Mickey Djuric
Carney faced immediate pressure from industry groups that called on him to drop the tax.
“Canada’s digital services tax unfairly targets U.S. companies, defies its USMCA commitments, and attempts to ring-fence the digital economy — undermining the global tax system,” Megan Funkhouser, senior director of the Information Technology Industry Council, said in a statement.
CCIA CEO Matt Schruers thanked the U.S. administration for its “decisive response” and called for an investigation into Canada’s digital tax.
About 90 percent of what Canada would collect under its Digital Services Tax Act would be from U.S. companies, members of Congress have argued.
“If Canada decides to move forward with this unprecedented, retroactive tax, it will set a terrible precedent that will have long-lasting impacts on global tax and trade practices,” 21 members of Congress wrote in a
letter to Trump on June 11.
Last week Finance Minister François-Philippe Champagne said Canada wasn’t going to pause the tax despite pressure from Congress, business groups and industries.
“This was voted by Parliament so we’re going ahead with the DST,” Champagne told reporters.
“We had fairly long, extensive discussions at the G7 about the different [tax] regimes that you find in different parts of the world. The [digital services tax] is not unique to Canada, by the way,” he said. “Let’s put that into context. This is not the big thing. The big thing is all the other types of taxes you have around the world.”
Ontario Premier Doug Ford had been urging the federal government to delay the tax over concerns that it would derail negotiations between the two countries.
“For our American partners, this is nothing but an unfair tax that’s putting millions of Canadian jobs at risk,” Ford said in October.