But behind the scenes, things were moving quickly.

Sources say a private call between Trump and Carney over the weekend paved the way for a de-escalation. Within 24 hours, Canada made a surprise announcement: the government would suspend implementation of the digital tax “in anticipation of a mutually beneficial agreement” with the U.S.

Political Pressure Mounts

Trump’s aggressive reaction may have been fueled in part by growing bipartisan pressure in Washington. A group of U.S. lawmakers had urged swift retaliation, warning that allowing a retroactive, foreign-imposed tax on American firms would set a dangerous precedent.

“It’s not just about tech,” one congressional aide told the press. “This is about protecting the U.S. tax base and preventing copycat policies elsewhere.”

A Temporary Truce — But for How Long?

In a statement issued late Sunday, Carney confirmed that the Canadian government would resume negotiations with the U.S. under the framework established at the G7 Leaders’ Summit, aiming for a July 21, 2025 deadline for resolution.

While the immediate crisis may have been defused, experts note that the underlying tensions — over digital taxation, trade balance, and sovereignty — remain unresolved.

For now, both sides appear to have stepped back from the brink. But with high stakes and two strong-willed leaders involved, this might only be a pause in a much longer chess match.