Canada's Digital Services Tax Stays in Place Despite G-7 Deal
Canada is proceeding with its digital services tax on technology companies such as Meta Platforms Inc. despite a Group of Seven agreement that resulted in removing the Section 899 'revenge tax' proposal from US President Donald Trump's tax bill.
The first payment for Canada's digital tax is still due Monday, the country's Finance Department confirmed, and covers revenue retroactively to 2022. The tax is 3% of the digital services revenue a firm makes from Canadian users above C$20 million ($14.6 million) in a calendar year.
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Associated Press
11 minutes ago
- Associated Press
U.S., China announce a trade agreement - again. Here's what it means
WASHINGTON (AP) — The U.S. and China have reached an agreement — again — to deescalate trade tensions. But details are scarce, and the latest pact leaves major issues between the world's two biggest economies unresolved. President Donald Trump said late Thursday that a deal with China had been signed 'the other day.'' China's Commerce Ministry confirmed Friday that some type of arrangement had been reached but offered few details about it. Sudden shifts and a lack of clarity have been hallmarks of Trump's trade policy since he returned to the White House determined to overturn a global trading system that he says is unfair to the United States and its workers. He's been engaged for months in a battle with China that has mostly revealed how much pain the two countries can inflict on each other. And he's racing against a July 8 deadline to reach deals with other major U.S. trading partners. The uncertainty over his dealmaking and the cost of the tariffs, which are paid by U.S. importers and usually passed on to consumers, have raised worries about the outlook for the U.S. economy. And although analysts welcomed the apparent easing of tensions with China, they also warned that the issues dividing Washington and Beijing are unlikely to be resolved anytime soon. What did the two sides agree to? U.S. Treasury Secretary Scott Bessent said Friday that the Chinese had agreed to make it easier for American firms to acquire Chinese magnets and rare earth minerals critical for manufacturing and microchip production. Beijing had slowed exports of the materials amid a bitter trade dispute with the Trump administration. Without explicitly mentioning U.S. access to rare earths, the Chinese Commerce Ministry said that 'China will, in accordance with the law, review and approve eligible export applications for controlled items. In turn, the United States will lift a series of restrictive measures it had imposed on China.'' The Chinese have complained about U.S. controls on exports of advanced U.S. technology to China. But the ministry statement did not specifically say whether the United States planned to ease or lift those controls. In his interview on Fox Business Network's 'Mornings with Maria,' Bessent mentioned that the United States had earlier imposed 'countermeasures'' against China and 'had held back some vital supplies for them.'' 'What we're seeing here is a de-escalation under President Trump's leadership,'' Bessent said, without spelling out what concessions the United States had made or whether they involved America's export controls. Jeff Moon, a trade official in the Obama administration who now runs the China Moon Strategies consultancy, wondered why Trump hadn't disclosed details of the agreement two days after it had been reached. 'Silence regarding the terms suggests that there is less substance to the deal than the Trump Administration implies,″ said Moon, who also served as a diplomat in China. Wait. This sounds familiar. How did we get here? The agreement that emerged Thursday and Friday builds on a 'framework'' that Trump announced June 11 after two days of high-level U.S.-China talks in London. Then, he announced, China had agreed to ease restrictions on rare earths. In return, the United States said it would stop seeking to revoke the visas of Chinese students on U.S. college campuses. And last month, after another meeting in Geneva, the two countries had agreed to dramatically reduce massive taxes they'd slapped on each other's products, which had reached as high as 145% against China and 125% against the U.S. Those triple-digit tariffs threatened to effectively end trade between the United States and China and caused a frightening sell-off in financial markets. In Geneva, the two countries agreed to back off and keep talking: America's tariffs went back down to a still-high 30% and China's to 10%. That led to the talks in London earlier this month and to this week's announcement. Where does all this leave U.S.-China economic relations? If nothing else, the two countries are trying to ratchet down tensions after demonstrating how much they can hurt each other. 'The U.S. and China appear to be easing the chokeholds they had on each other's economies through export controls on computer chips and rare earth minerals, respectively,' said Eswar Prasad, professor of trade policy at Cornell University. 'This is a positive step but a far cry from signaling prospects of a substantial de-escalation of tariffs and other trade hostilities.'' Trump launched a trade war with China in his first term, imposing tariffs on most Chinese goods in a dispute over China's attempts to supplant U.S. technological supremacy. Trump's trade team charged that China was unfairly subsidizing its own tech companies, forcing U.S. and other foreign companies to hand over sensitive technology in exchange for access to the Chinese market and even engaging outright theft of trade secrets. The squabbling and negotiating of the past few months appear to have done little to resolve Washington's complaints about unfair Chinese trade practices and America's massive trade deficit with China, which came to $262 billion last year. This week's agreement 'includes absolutely nothing related to the U.S.'s concerns regarding China's trade surplus or non-market behavior,'' said Scott Kennedy of the Center for Strategic and International Studies. 'If the two sides can implement these elements of the ceasefire, then they could begin negotiations on issues which generated the initial escalation in tensions in the first place.'' What is happening with Trump's other tariffs? Since returning to the White House in January, Trump has made aggressive use of tariffs. In addition to his levies on China, he has imposed 'baseline'' 10% taxes on imports from every country in the world . And he's announced even higher taxes — so-called reciprocal tariffs ranging from 11% to 50% — on countries with which the United States runs a trade deficit. But after financial markets sank on fears of massive disruption to world trade, Trump suspended the reciprocal levies for 90 days to give countries a chance to negotiate reductions in their barriers to U.S. exports. That pause lasts until July 8. On Friday, Bessent told Fox Business Network that the talks could extend beyond the deadline and be 'wrapped up by Labor Day'' Sept. 1 with 10 to 12 of America's most important trading partners. Trump further played down the July 8 deadline at a White House press conference Friday by noting that negotiations are ongoing but that 'we have 200 countries, you could say 200 countries-plus. You can't do that.' Instead of new trade deals, Trump said his administration would in coming days or weeks send out a letter where 'we're just gonna tell them what they have to pay to do business in the United States.'' Separately, Trump took sudden aim at Canada Friday, saying on social media that he's immediately suspending trade talks with that country over its plan to impose a tax on technology firms next Monday. Trump called Canada's digital services tax 'a direct and blatant attack on our country.' The digital services tax will hit companies like Amazon, Google, Meta, Uber and Airbnb with a 3% levy on revenue from Canadian users. It will apply retroactively, leaving U.S. companies with a $2 billion bill due at the end of the month. ____ AP Writers Didi Tang and Will Weissert in Washington contributed to this report.
Miami Herald
14 minutes ago
- Miami Herald
Analyst reboots Facebook parent stock price target on AI investments
Afraid about losing your job to artificial intelligence? You're not alone. More than half of the people responding to a Pew Research Center survey said they were worried about the future impact of AI use in the workplace, and 32% think it will lead to fewer job opportunities for them in the long run. Don't miss the move: Subscribe to TheStreet's free daily newsletter Only 6% of workers queried in the survey of 5,273 employed U.S. adults said workplace AI use will lead to more job opportunities for them in the long run. About a third said it will lead to fewer opportunities for them, and 31% say it will not make much difference. It's not surprising that people are concerned about their careers. A McKinsey report projects that by 2030, 30% of current U.S. jobs could be automated, with 60% significantly altered by AI tools. Mark Zuckerberg has a different point of view. "I tend to think that for at least the foreseeable future, this is going to lead towards more demand for people doing work not less now," the chairman and CEO of Facebook parent Meta Platforms (META) said in recent interview. Bloomberg/Getty Images "The common belief is that all the jobs are going to go away and actually that has not really been how the history of technology has worked," he added. "You can create things that take away 90% of the work and that leads you to want more people, not less." Meta has certainly been busying expanding its AI capabilities. More Tech Stocks: Amazon tries to make AI great again (or maybe for the first time)Veteran portfolio manager raises eyebrows with latest Meta Platforms moveGoogle plans major AI shift after Meta's surprising $14 billion move The social media giant is reportedly in talks to acquire voice AI platform PlayAI, according to Bloomberg, which could help Meta bring more voice features to its AI assistant and its smartglasses. PlayAI creates AI-powered voice features with the goal of being as "responsive as a conversation between two people," according to a company blog post Meta's artificial intelligence assistant has one billion monthly active users across the company's family of apps, Zuckerberg said at the company's May 28 annual shareholder meeting. He noted that the "focus for this year is deepening the experience and making Meta AI the leading personal AI with an emphasis on personalization, voice conversations and entertainment," In April, the company said it was launching a stand-alone artificial intelligence app and going head-to-head with ChatGPT maker OpenAI. And during Meta's first quarter earnings call, Zuckerberg said that "the major theme right now of course is how AI is transforming everything we do." "The first opportunity is improved advertising," he told analysts. "Our goal is to make it so that any business can basically tell us what objective they're trying to achieve -- like selling something or getting a new customer -- and how much they're willing to pay for each result, and then we just do the rest." Zuckerberg said businesses used to have to generate their own ad creative and define what audiences they wanted to reach, but "AI has already made us better at targeting and finding the audiences that will be interested in their product than many businesses are themselves, and that keeps improving." "And now AI is generating better creative options for many businesses as well. I think that this is really redefining what advertising is into an AI agent that delivers measurable business results at scale," he said. Related: Veteran portfolio manager raises eyebrows with latest Meta Platforms move "And if we deliver on this vision, then over the coming years I think that the increased productivity from AI will make advertising a meaningfully larger share of global GDP than it is today," The total number of ad impressions served across Meta's services increased 5% and the average price per ad increased 10%. Susan Li, Meta's Chief Financial Officer, said during the call that Meta has invested for many years and continues to invest in driving ad performance improvements, adding that "year-over-year conversion growth remains strong." "For us, we really believe, first and foremost, that advertising is a relative performance game," Li said. "That's especially important for us because the vast majority of our business is direct response advertising." Piper Sandler cited Meta's advertising efforts in a June 27 research note. The firm boosted its price target on the company to $808 from $650 and kept an overweight rating on the shares, according to The Fly. Meta's investments in AI are transforming its advertising technology, driving higher ad performance, conversion rates, and return on ad spend, Piper said. New tools like AI models GEM, Andromeda, and Lattice, which are responsible for selecting and recommending ads displayed on Facebook, Instagram and Threads, can drive revenue growth in the mid-teens for multiple years, the firm said. Piper Sandler, which says Meta is a new Top Large Cap Pick, adds that higher ad pricing is being driven by better conversion, and not lower engagement. Related: Fund-management veteran skips emotion in investment strategy The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
Bloomberg
17 minutes ago
- Bloomberg
Trump Says He'll Pick a Fed Chair Who Wants to Cut Rates
President Donald Trump said he will pick a successor for Federal Reserve Chair Jerome Powell who wants to cut interest rates, a condition that would strike at the heart of the central bank's independence. 'If I think somebody's going to keep the rates where they are or whatever, I'm not going to put them in. I'm going to put somebody that wants to cut rates. There are a lot of them out there,' Trump told reporters Friday.
