Canada blinks first in tech-tax standoff — Trade talks back on

Stephen Innes SPI Asset Management

Ottawa just yanked the plug on its long-threatened digital services tax hours before it was set to hit the books, effectively throwing a bone to Trump and reopening the stalled trade channel. Call it what it is: a clean policy surrender to keep the bilateral show on the road.

The 3% DST was set to ding U.S. tech giants like Meta, Amazon, and Netflix—until Trump slammed it as a “blatant attack” and pulled the plug on trade talks in retaliation. By Sunday night, Champagne folded. Now it’s game on for a fresh deal by July 21, the date floated post-G7. Carney’s signaling full compliance to get the reset.

Trump's blunt-force diplomacy worked. Canada’s tax was projected to pull in over C$7bn over five years, but Ottawa clearly decided a bruised relationship with its largest trading partner wasn’t worth the revenue. The message is clear: poke the tariff bear, and you get scorched.

This is bullish for risk. USDCAD dipped. Reopening talks lifts a weight off broader North American sentiment. With India, Taiwan, Vietnam and China also in back-channel discussions, we’re seeing a synchronized unwind of the tariff war premium.

Markets love capitulation. Canada just gave them one. The path of least resistance stays up.

Stocks in Asia kicked off the week riding the global risk wave, with traders chasing headlines—not fundamentals—as progress across multiple trade fronts fuels a “buy the relief” rotation. The MSCI Asia-Pac index nudged higher, led by Japan’s Nikkei ripping over 1.6% after their top negotiator extended his stay in DC. That’s not just diplomatic optimism—it’s price action confirmation.

Futures followed suit. S&P up 0.4%, Nasdaq 100 up 0.5%.

Everyone’s suddenly rowing in the same direction—at least for now.

Author

Stephen Innes

SPI Asset Management

With more than 25 years of experience, Stephen has a deep-seated knowledge of G10 and Asian currency markets as well as precious metal and oil markets.

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