A Canadian tax targeting US big tech is scrapped at the last minute.

Hello, this is the Marketplace Morning Report, and we're live from the BBC World Service.

I'm Leanna Byrne. Good morning.

So Canada has scrapped its planned digital services tax, or DST, just hours before it was due to take effect after President Donald Trump threatened to end trade talks over the issue.

The BBC's E. McWilliam reports.

The Canadian Department of Finance said in a statement that the digital services tax would be rescinded

in anticipation of a comprehensive trade arrangement with the United States.

The planned tax would have hit major US tech companies, including

Amazon, Meta and Apple. Ottawa said it was introduced because large technology companies operating

in Canada would otherwise not pay tax on revenues generated there. President Trump's threatened

new tariffs, however, would have thrown US-Canada trade into chaos again after months of relative calm.

That was Ian McWilliam reporting. Earlier, I spoke to Carleen Varian, Associate Vice President

at Summa Strategies, and a former Chief of Staff to then Canadian Prime Minister, Justin Trudeau.

This is not just a Donald Trump and Republican grievance under President Biden. His

U.S. Trade Representative frequently raised the issue of the DST with Canadian counterparts as a

point of disagreement and something that was a challenge for the trading relationship. But I think

the president likes to create some drama at the 11th hour. And this is the moment when the tax

would have been implemented. Is that a dangerous precedent, though, if what Trump wants is going to

push what Canadian lawmakers do? It is a bit complex in that way. I think you see a division

among Canadian businesses. On the one hand, Canadians don't want to see themselves punished by the

U.S. for a tax that has nothing to do with them.

But at the same time, you also have businesses who I think directly are impacted by this.

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