What is Canada's Digital Services Tax threatening American tech companies | Explained

President Donald Trump on Friday said he is immediately suspending all trade talks with Canada over its Digital Services Tax policy

Published on: Jun 28, 2025 12:27 AM IST

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President Donald Trump on Friday said he is immediately suspending all trade talks with Canada over its Digital Services Tax policy that will hit American tech companies. In a post on Truth Social, the 78-year-old said that Ottawa had informed his administration that the tax will take effect on Monday.

Canada's Digital Services tax is expected to hit Apple among other tech companies (Unsplash)

“We have just been informed that Canada, a very difficult Country to TRADE with, including the fact that they have charged our Farmers as much as 400% Tariffs, for years, on Dairy Products, has just announced that they are putting a Digital Services Tax on our American Technology Companies, which is a direct and blatant attack on our Country,” Trump said in his post.

He further accused Canada of ‘copying the European Union, which has done the same thing, and is currently under discussion with us, also’.

“Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately. We will let Canada know the Tariff that they will be paying to do business with the United States of America within the next seven-day period."

What is Digital Services Tax?

Canada’s Digital Services Tax (DST) is a 3% tax on revenue from specific digital services provided to Canadian users, enacted through the Digital Services Tax Act, which received royal assent on June 20, 2024, and took effect on June 28, 2024.

It targets large businesses with global revenue of €750 million (~US$801 million) and Canadian digital services revenue exceeding C$20 million (~US$14.8 million) annually.

The tax applies retroactively to revenues earned since January 1, 2022, with the first payment due by June 30, 2025. It covers four revenue categories: online marketplace services, online advertising (e.g., Google), social media services, and sales or licensing of Canadian user data.

ABOUT THE AUTHOR
Yash Nitish Bajaj
Yash Bajaj is a Chief Content Producer with a strong foundation in US coverage, digital strategy, and audience-focused storytelling. As part of the US Desk at Hindustan Times, he covers a wide range of topics - from American politics to sports (NFL, NBA, derbies, MLB and more). Before joining Hindustan Times, Yash served as Deputy News Editor at Times Now, where he oversaw international coverage and led a team of six. In this role, he significantly expanded global traffic through strategic planning, SEO-driven content execution, and meticulous trend tracking across platforms. He is experienced in managing high-pressure breaking-news shifts, coordinating live coverage, and building newsroom systems that improve speed, accuracy, and reach. Prior to Times Now, Yash held a position at Opoyi, where he headed the Sports and US news team. He developed broad editorial strategies, guided reporters across multiple beats, and played a key role in recruiting and training new talent. His responsibilities also extended to social media management and experimenting with innovative content formats. A passionate NFL fan, Yash is a die-hard supporter of the Cincinnati Bengals and has followed Joe Burrow closely since his college days at LSU. Whether breaking down top players' latest performance, analyzing team performances, or tracking roster moves, he brings the same dedication and sharp storytelling to his sports coverage as he does to American politics and breaking news. When he’s not writing, Yash can often be found watching games or debating the latest NFL storylines with fellow fans. Yash holds a Bachelor of Mass Media (Journalism) from HR College, Mumbai University. His interests extend well beyond the newsroom: he is an enthusiastic explorer of AI tools, a movie buff with an ever-growing watchlist, and someone who enjoys unraveling conspiracy theories for fun.Read More

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