Trade negotiations between the U.S. and Canada are back on, just days after President Donald Trump said he was ending talks due to a digital services tax levied on U.S. companies by the Canadian government.
According to a report from The Wall Street Journal, Canada announced late on Sunday that it was rescinding the digital services tax that would’ve collected billions of dollars from U.S. tech firms. This came two days after Trump said on social media that he was terminating talks immediately, calling the Canadian tax a “direct and blatant attack on our Country.”
A spokesperson for the office of Canadian Prime Minister Mark Carney said that Carney and Trump spoke Sunday and agreed to resume talks, with a goal of finalizing a long-term agreement by July 21.
“President Trump has once again leveraged the power of the American economy, the best and biggest in the world, to deliver a victory for American industries and workers,” White House spokesperson Kush Desai told the Journal.
After announcing his global tariff plan in early April, Trump paused most of them only a week later. These temporary reprieves are set to expire next week.
The resumption of trade talks could be viewed as good news by U.S. homebuilders, who have previously lobbied Trump for a tariff exemption on imported building materials.
Their major trade group, the National Association of Home Builders (NAHB), said in February that Canada and Mexico account for about 25% of materials imported to the U.S. The NAHB also estimated that new tariffs would add another $10,900 to the total cost of building a new home.
“NAHB’s members understand you have larger and well-intentioned policy goals in mind as you consider a holistic trade policy,” the trade group said in a letter to Trump earlier this year. “However, we respectfully ask that you consider the effects of tariffs on Americans struggling to afford housing and that you exempt critical construction materials from such actions. We look forward to working with you to create jobs, boost our economy, and provide safe and affordable housing for all Americans.”
According to data from the U.S. Census Bureau, Canada is America’s second-largest trade partner behind only Mexico. Canada accounted for $253.3 billion in imported and exported goods during the first four months of 2025, or 13.1% of all U.S. trade activity.
Worries about renewed inflation due to higher tariffs have impacted the housing market through higher mortgage rates. Federal Reserve Chair Jerome Powell has indicated multiple times that while price growth has cooled and is near the Fed’s goal of 2% per goal, there is too much uncertainty tied to the tariffs for the central bank to cut benchmark interest rates for the time being.
But Michelle Bowman, the Fed’s vice chair, recently spoke out in favor of a cut as soon as the end of July.
“Should inflation pressures remain contained, I would support lowering the policy rate as soon as our next meeting in order to bring it closer to its neutral setting and to sustain a healthy labor market,” Bowman said.
The newest data for the Personal Consumption Expenditures (PCE) index — the Fed’s preferred inflation gauge — was released on Friday and showed prices increasing 2.3% year over year in May. That was up slightly from 2.2% yearly growth in April.