Canada 'caved' to Trump over digital services tax, says White House

Washington: The White House on Monday declared that Canadian Prime Minister Mark Carney "caved" to pressure from US President Donald Trump after Canada dropped its controversial digital services tax targeting American tech giants, clearing the way for trade talks to resume.

“Prime Minister Carney and Canada caved to President Trump and the United States of America,” said White House Press Secretary Karoline Leavitt at a briefing. She added, “President Trump knows how to negotiate, and every country on the planet needs strong trade relations with the US”

The Canadian government announced late Sunday that it would rescind the tax—set to take effect Monday—on major US tech firms including Alphabet and Amazon. The levy, passed last year, could have cost American companies billions.

Trump had abruptly halted trade negotiations with Canada on Friday in retaliation for the move. Over the weekend, he reignited controversy by repeating his long-held suggestion that Canada should become the 51st US state.

“Frankly, Canada should be the 51st state, okay? It really should, because Canada relies entirely on the United States. We don't rely on Canada,” Trump told Fox News on Sunday Morning Futures.

The tensions emerged despite recent signs of improved relations between the two leaders. Carney visited the White House on May 6 for a cordial meeting, and they met again earlier this month at the G7 summit in Canada, where leaders urged Trump to ease up on trade threats.

Trump has set a July 9 deadline for countries to finalise trade agreements or face new US tariffs.

“He is going to set the rates for many of these countries if they don’t come to the table to negotiate in good faith,” Leavitt said. “He’s meeting with his trade team this week to make those decisions.”