Warning for Albanese government after US President Donald Trump pressures Canada into rescinding digital services tax
Labor has been delivered a stark warning amid negotiations with the United States after the Canadian government said it was rescinding its digital-services tax to salvage trade discussions with Donald Trump.
Canada's planned digital tax was three per cent of the digital services revenue a firm reaps from Canadian users above CA$20m in a calendar year, and payments were to be retroactive to 2022.
The tax would have targeted major tech giants including Facebook-owner Meta, Google-owner Alphabet, Apple, Amazon and others.
Trump abruptly called off trade talks on Friday over the tax targeting US technology firms, saying that it was a "blatant attack" before reiterating this on Sunday and pledging a new tariff rate on Canadian goods.
The US President and Canadian Prime Minister Mark Carney will now resume trade negotiations in order to agree on a deal by July 21, Canada's finance ministry said in a statement.
The back-and-forth comes as a warning for the Albanese government's news media bargaining incentive
which will force technology giants to pay local news outlets for their content.
After Trump began revealing his array of tariffs, Prime Minister Anthony Albanese vowed to defend the legislation targeting the tech giants.
'We have been crystal clear with the United States about what is not up for negotiation,' he said in April.
'Our government stands by our media bargaining code. We strongly support local content in streaming services, so Australian stories stay on Australian screens.'
Assistant Treasurer Daniel Mulino last week stressed the incentive remained a 'key priority' for Labor amid negotiations with the Trump Administration.
'This is a policy the government remains committed to,' Mr Mulino said, according to the Australian Financial Review.
Concerns about Australia's media bargaining code arose recently as section 899 of Trump's 'big beautiful bill' threatened a 15 per cent tax on nations the US believes unfairly treats its companies.
US Treasury Secretary Scott Bessent rolled back the legislation after reaching an 'understanding' with the G7 where American companies would be exempt for the new global minimum 15 per cent corporate tax.
Treasurer Jim Chalmers welcomed the news after engaging with Mr Bessent last week to make Australia's case against section 899.
'In that meeting he said he was progressing what he could to try and resolve these issues, and we're really pleased to see some of that progress in his announcement today,' Chalmers said.
'Australia will continue to engage constructively through the OECD on international tax rules that are fair and ensure multinationals pay their fair share in Australia."
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The Advertiser
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The prospect of policy easing has helped Treasuries weather worries on the ballooning US budget deficit. Ten-year Treasury yields fell three basis points to 4.25 per cent, having fallen seven bps last week. The dollar struggled in part over concern that tariffs and policy whipsaws from the White House will drag on economic growth. The euro steadied, having climbed more than one per cent last week to its highest levels since 2021 against a broadly weak dollar. Sterling tipped 0.1 per cent lower to just below a similar peak hit last week, trading near $1.37. The dollar was down 0.3 per cent to 144.19 yen and the dollar index eased 0.2 per cent to 97.237, a whisker above three-year lows. The dollar has fallen by more at this stage in the year than in any previous year since the US moved to a free-floating exchange rate in 1973. 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The talks are aimed at getting a deal done by July 21, extending Trump's original July 9 deadline for his "reciprocal" tariffs. Officials have suggested most deals could now be done by the September 1 Labor Day holiday. Investors were also keeping a wary eye on the progress of a huge US tax-cutting and spending bill slowly making its way through the Senate, with signs it may not make it by Trump's preferred July 4 deadline. The Congressional Budget Office estimated the bill would add $3.3 trillion to the nation's debt over a decade, testing foreign appetite for US Treasuries. There was no doubting the demand for the US tech sector and megacap growth stocks including Nvidia, Alphabet and Amazon. Nasdaq futures rose another 0.5 per cent, while S&P 500 futures added 0.4 per cent, having touched record highs. 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The prospect of policy easing has helped Treasuries weather worries on the ballooning US budget deficit. Ten-year Treasury yields fell three basis points to 4.25 per cent, having fallen seven bps last week. The dollar struggled in part over concern that tariffs and policy whipsaws from the White House will drag on economic growth. The euro steadied, having climbed more than one per cent last week to its highest levels since 2021 against a broadly weak dollar. Sterling tipped 0.1 per cent lower to just below a similar peak hit last week, trading near $1.37. The dollar was down 0.3 per cent to 144.19 yen and the dollar index eased 0.2 per cent to 97.237, a whisker above three-year lows. The dollar has fallen by more at this stage in the year than in any previous year since the US moved to a free-floating exchange rate in 1973. "At this point, further weakness could become self-reinforcing as underhedged European/Asian portfolios chase the move," James Reilly, a senior markets economist at Capital Economics, said. In commodity markets, the general revival in risk sentiment weighed on gold, which rose 0.4 per cent to $3,285 an ounce but held below April's record top of $3,500. Oil prices continued to struggle on concerns about plans for increased output from OPEC+, which contributed to a 12 per cent slide last week. Brent declined 17 cents to $67.60 a barrel, while US crude fell 26 cents to $65.26 per barrel. Wall Street futures have reached record highs as optimism over US trade negotiations with key partners helps boost sentiment in markets. Meanwhile, world stocks were hovering just below recent record highs and European shares had trimmed early falls. Canada said on Sunday it had rescinded its digital services tax in a bid to advance trade negotiations, bowing to pressure from US President Donald Trump. The talks are aimed at getting a deal done by July 21, extending Trump's original July 9 deadline for his "reciprocal" tariffs. Officials have suggested most deals could now be done by the September 1 Labor Day holiday. Investors were also keeping a wary eye on the progress of a huge US tax-cutting and spending bill slowly making its way through the Senate, with signs it may not make it by Trump's preferred July 4 deadline. The Congressional Budget Office estimated the bill would add $3.3 trillion to the nation's debt over a decade, testing foreign appetite for US Treasuries. There was no doubting the demand for the US tech sector and megacap growth stocks including Nvidia, Alphabet and Amazon. Nasdaq futures rose another 0.5 per cent, while S&P 500 futures added 0.4 per cent, having touched record highs. 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The prospect of policy easing has helped Treasuries weather worries on the ballooning US budget deficit. Ten-year Treasury yields fell three basis points to 4.25 per cent, having fallen seven bps last week. The dollar struggled in part over concern that tariffs and policy whipsaws from the White House will drag on economic growth. The euro steadied, having climbed more than one per cent last week to its highest levels since 2021 against a broadly weak dollar. Sterling tipped 0.1 per cent lower to just below a similar peak hit last week, trading near $1.37. The dollar was down 0.3 per cent to 144.19 yen and the dollar index eased 0.2 per cent to 97.237, a whisker above three-year lows. The dollar has fallen by more at this stage in the year than in any previous year since the US moved to a free-floating exchange rate in 1973. "At this point, further weakness could become self-reinforcing as underhedged European/Asian portfolios chase the move," James Reilly, a senior markets economist at Capital Economics, said. In commodity markets, the general revival in risk sentiment weighed on gold, which rose 0.4 per cent to $3,285 an ounce but held below April's record top of $3,500. Oil prices continued to struggle on concerns about plans for increased output from OPEC+, which contributed to a 12 per cent slide last week. Brent declined 17 cents to $67.60 a barrel, while US crude fell 26 cents to $65.26 per barrel.
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- Perth Now
Wall St gains as trade hopes feed quarterly momentum
The S&P 500 and Nasdaq have scaled new heights as optimism over the US striking trade deals with its key partners fuelled the bullish momentum that has kept indexes on track for gains this quarter. The Nasdaq, S&P 500 and Dow Jones have gained 17.5 per cent, 10.2 per cent and 4.6 per cent so far in the quarter, touching and then retreating from record levels since late last year, partly because of headlines around US President Donald Trump's rapid policy changes. The three indexes are still set for their weakest first-half performances since 2022, as the resulting uncertainty around policy has kept investors wary. The blue-chip Dow remains 2.3 per cent below its record closing high reached on December 4. On Monday, the benchmark S&P 500 and the tech-heavy Nasdaq Composite extended their record run from last week, on bets of deeper US interest rate cuts and renewed optimism around AI. Investor focus is now on a July 9 deadline for countries to reach deals with the United States or see tariffs spike higher but Trump has said he could extend the tariff deadline or "make it shorter". Canada on Sunday scrapped its digital services tax targeting US tech firms, just hours before it was due to take effect, in a bid to advance stalled trade negotiations with the United States. "We've got this deadline coming but then Trump has said that the deadline can be moved. And then you've got markets thinking that the Fed could potentially cut interest rates sooner than later. So there are a lot of drivers here," said Dennis Dick, at trader at Triple D Trading Inc. "Investors are just confident here in this market right now because we've had some bad news come in, even some bad earnings reports, and they buy the stocks right back. So bulls remain in complete control." Investors are also looking into economic data and fiscal policy developments to see if the latest bull run in US stocks can continue. US Senate Republicans will try to pass Trump's sweeping tax-cut and spending bill, despite divisions within the party about its expected $US3.3 trillion ($A5 trillion) hit to the $36.2 trillion national debt. Trump wants the bill passed before the July 4 Independence Day holiday. Key economic data releases this week include monthly non-farm payrolls and the Institute for Supply Management's survey on manufacturing and services sectors for June. Several US central bank officials including Federal Reserve chair Jerome Powell are scheduled to speak later this week. A raft of soft economic data and expectations that Trump will replace Powell with someone dovish have pushed up bets of rate cuts from the Fed this year. In early trading on Monday, the Dow Jones Industrial Average rose 178.68 points, or 0.41 per cent, to 43,998.06, the S&P 500 gained 14.13 points, or 0.23 per cent, to 6,187.20 and the Nasdaq Composite gained 44.64 points, or 0.22 per cent, to 20,318.10. Shares of big US banks rose after most cleared the Federal Reserve's annual "stress test," paving the way for billions in stock buybacks and dividends. Shares of Bank of America edged up 0.8 per cent while rivals JPMorgan Chase and Wells Fargo added 1.5 per cent and 1.9 per cent. Juniper Networks rose 8.3 per cent after the US Justice Department settled its lawsuit challenging server maker Hewlett Packard Enterprise's all-cash acquisition of the networking gear maker for $US14 billion. Hewlett Packard Enterprise shares soared 9.6 per cent. Shares of Oracle rose 6.4 per cent after the company said the new cloud services agreement is expected to contribute more than $US30 billion to annual revenue starting in fiscal year 2028. The S&P 500 posted 25 new 52-week highs and no new lows while the Nasdaq Composite recorded 61 new highs and 37 new lows. Advancing issues outnumbered decliners by a 1.56-to-1 ratio on the NYSE, while by a 1.7-to-1 ratio on the Nasdaq.
