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Trade War Update: Canada is removing its “digital service tax” on tech companies to restart trade talks with the US. This comes just days after President Trump canceled trade talks with Canada due to this tax.   In 2020, the DST was introduced to solve the issue of many big internet businesses operating in Canada not having to pay taxes on Canadian-generated revenue. Country has consistently favored a multilateral agreement concerning the taxation of digital services. The DST was implemented to close the aforementioned tax gap while Nation was negotiating a multilateral deal with its foreign partners, particularly the United States, to replace national digital services taxes.

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According to The Kobeissi Letter X post  “ Canada is removing its DST on tech companies to resume US trade talks, following President Trump's cancellation of such talks due to the tax.” Nation made an interesting approach, but tax reduction is not certain when the government is minority. Right now, Trump's pressure was effective—it's truly an art of the deal. Will other countries dig in or reconsider their DSTs as a result of this? Global tax negotiations remain a muddle.

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“Rescinding the DST will allow the negotiations of a new economic and security relationship with the US to make vital progress and reinforce our work to create jobs and build prosperity for all Canadians,” said Canada’s finance minister François-Philippe Champagn. 
Prime Minister Mark Carney said cutting the fees “will support a resumption of negotiations towards the July 21 timeline” for striking a trade deal that was declared at this month’s G7 leaders’ summit in Kananaskis.

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Prime Minister Carney and President Trump aim for a comprehensive economic and security partnership by July 21, prioritizing Canadian workers and businesses. The US and Canada have agreed that they will resume negotiations with a view towards agreeing a deal. The Canadian government stated in a statement Sunday evening that it was taking a backseat to the toll in an effort to get the nations back to the negotiating table.
Digital Tax De-escalation: Smart Strategy or Political Gamble?
It was estimated that the DST, which was implemented last year, would generate $5.9 billion ($4.2 billion) in revenue over a five-year period. Large or international corporations that offer digital services to Canadians, like Alphabet, Amazon, and Meta, are subject to the three percent fee. Washington has already asked for dispute resolution discussions over the issue. The first payment is due by June 30, 2025, and the fee is applied retrospectively to revenue received since January 1, 2022. Social media services, online marketplace services, online advertising, and the selling or licensing of user data belonging to Canadians are its four main areas of focus.
Global reactions mixed: de-escalation or just a short-term patch?
Seems like economic pressure worked faster than expected. Removing the digital service tax shows how crucial US-Canada trade relations are — especially in tech. Let’s see if this opens the door to smoother negotiations or just a temporary patch. The fact that Canada has changed course and opened the door for negotiations while lowering the threat of tariffs is a blatant de-escalation signal. Although there is instant respite for US tech firms, the industry still has to deal with a patchwork of DST around the world and ongoing policy risk.
The true question is: when international cooperation lags, will other nations now reverse course or increase their own digital service taxes?

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🔹 Background: A Trade War That Shook the World

The U.S.-China trade dispute has been one of the most significant economic conflicts in recent history, with both nations imposing steep tariffs on each other’s goods. The tensions escalated further with export restrictions on critical materials, disrupting global supply chains.

Now, in a high-stakes meeting in London, top officials from both countries are sitting down to negotiate a path forward.

🔹 The London Talks: Who’s Involved?

✔️ U.S. Delegation: Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and U.S. Trade Representative Jamieson Greer.

✔️ Chinese Delegation: Vice Premier He Lifeng, a key figure in China’s economic strategy.

✔️ Location: The talks are taking place at Lancaster House, a historic venue in London.

🔹 Key Issues on the Table

🚨 Tariff Reductions: Both sides previously agreed to a 90-day reduction in tariffs in Geneva, but the U.S. has accused China of slow-walking its commitments.

🚨 Rare Earth Exports: China had halted shipments of rare earth minerals, critical for U.S. industries. Reports suggest Chinese leadership is considering resuming exports.

🚨 Tech & Semiconductor Restrictions: The U.S. has warned its chip industry against using Chinese semiconductors, further straining relations.

🔹 Market Impact: What’s at Stake?

✔️ Stock Market Volatility: Investors are watching closely, as previous trade talks have triggered major market swings.

✔️ Supply Chain Stability: The semiconductor, aerospace, and automotive industries depend on rare earth materials, making this a crucial issue.

✔️ Global Trade Relations: The outcome of these talks could reshape international trade policies for years to come.

🔹 What’s Next?

The London negotiations represent a critical turning point in U.S.-China relations. If successful, they could ease tensions, stabilize markets, and restore investor confidence. However, if talks break down, we could see another wave of economic uncertainty.

Stay tuned for updates as the discussions unfold! 🚀🔥

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#GlobalMarkets #EconomicPolicy #Write2Earn 🚀🔥

U.S.-China trade talks start Monday, affecting crypto markets.
May CPI data releases Wednesday, influencing inflation outlook.May PPI data on Thursday may drive crypto volatility.Social media flags key events for crypto traders. 
U.S.-China Trade Talks Kick Off Monday
U.S. and China begin in-person trade negotiations today in London. The talks aim to address ongoing trade tensions. Outcomes could influence global markets. Cryptocurrencies often react to such geopolitical shifts. A successful negotiation may boost investor confidence. Failure could trigger market uncertainty.
The discussions follow recent tariff disputes. Both nations seek balanced trade agreements. Results may impact risk assets like crypto. Market participants await details from the talks.
May CPI Inflation Data Releases Wednesday
The U.S. releases May CPI inflation data on Wednesday at 8:30 AM ET. This report measures consumer price changes. It serves as a key indicator of inflation trends. Higher-than-expected figures could signal tighter monetary policy.
The data affects Federal Reserve decisions. Crypto markets often respond to inflation news. A rise in CPI might pressure digital assets. Analysts expect volatility following the release.
May PPI Inflation Data Due Thursday
The May PPI inflation data follows on Thursday at 8:30 AM ET. This report tracks producer price changes. It reflects costs at the wholesale level. The figures provide early inflation insights.
PPI data influences consumer prices over time. A significant increase could raise concerns. Crypto traders monitor this release closely. Market movements may depend on the outcome.
#Crypto #Bitcoin #InflationData #USTradeTalks #CryptoMarket