The United States requested trade dispute talks with Canada over its new digital services tax on Friday, August 30.
As per several reports, the Biden administration has labeled the tax as "discriminatory" and believes it may be inconsistent with Canada’s trade agreement obligations.
According to the US Trade Representative's office, they will work with Canada to address concerns about the tax enacted in June.
If they cannot reach an agreement within 75 days, the US may request a dispute resolution panel under the US-Mexico-Canada Agreement (USMCA), which could result in US tariffs on Canadian imports.
US Trade Representative Katherine Tai said in an official statement, noting, "The United States opposes unilateral digital service taxes that discriminate against U.S. companies. USTR is taking action today to address Canada's discriminatory policies."
He further emphasised, "As we pursue these consultations, we will continue to support the Department of the Treasury in the OECD/G20 global tax negotiations to bring a comprehensive solution to the challenge of DSTs."
Previously, the US had prepared retaliatory actions against digital services taxes from other countries, including Austria, Britain, France, India, Italy, Spain, and Turkey.
However, these actions were delayed as global negotiations for a broader tax agreement continue.
