Canada drops tech tax to progress trade talks
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Leaving all the time in the world for the things you actually want to do. Get a new Dell AI PC starting at $699.99 at dell.com slash AI dash PC. How those ahead stay ahead. A Canadian tax targeting US big tech is scrapped at the last minute. Hello, this is the Marketplace Morning Report and we're live from the BBC World Service. I'm Leanna Byrne. Good morning.

So Canada has scrapped its planned Digital Services Tax, or DST, just hours before it was due to take effect after President Donald Trump threatened to end trade talks over the issue. The BBC's Eamon McWilliam reports. The Canadian Department of Finance said in a statement that the Digital Services Tax would be rescinded in anticipation of a comprehensive trade arrangement with the United States. The planned tax would have hit major US tech companies, including Amazon, Meta and Apple.

Ottawa said it was introduced because large technology companies operating in Canada would otherwise not pay tax on revenues generated there. President Trump's threatened new tariffs, however, would have thrown US-Canada trade into chaos again after months of relative calm. That was Ian McWilliam reporting. Earlier, I spoke to Carleen Varian, Associate Vice President at Summa Strategies and...

former Chief of Staff to then Canadian Prime Minister Justin Trudeau. This is not just a Donald Trump and Republican grievance under President Biden. His US trade representative frequently raised the issue of the DST with Canadian counterparts as a point of disagreement and something that was a challenge for the trading relationship. But the

I think the president likes to create some drama at the 11th hour. And this is the moment when the tax would have been implemented. Is that a dangerous precedent, though, if what Trump wants is going to push what Canadian lawmakers do? It is a bit complex in that way. I think you see a division among Canadian businesses. On the one hand, Canadians don't want to see themselves punished by the U.S. for a tax that has nothing to do with them. But at the same time, you also have businesses who I think

directly are impacted by this. And that's because many of the tech companies are choosing to pass on the digital services tax directly to their customers. Carly and Varian, thank you so much for joining us on Marketplace. Thank you for having me.

Now, while Canada's trading relationship with the US is still up in the air, a UK-US trade deal, which has lowered some tariffs on imports coming in from Britain, is coming in today. Car manufacturers will now be able to export to the US with a reduced 10% tariff, and 10% tariffs have been fully removed from aircraft parts and engines. Nigel Redwood is the Managing Director of Revolution Racecars, based in Peterborough in the east of England.

It does make a substantial difference. So at Revolution Racecars, we're a low-volume racecar manufacturer that export probably about 60%, 65% of our revenues to the USA. So the increase in tariff had a big impact on our customer base and was very unsettling for the last six months. Wow.

That was Nigel Redwood, the boss of the UK racing car manufacturer Revolution Racecars. But there's still no breakthrough on steel and aluminium. The US continues to impose a 25% tax on those imports. And unless a deal is struck soon, that could soon double to 50% on July 9th. It's a major worry for UK steelmakers like Tata, who say the uncertainty is already hurting their business. Now, let's do the numbers.

China's main stock markets bounce back today on hopes trade talks with the U.S. will hold. The CSI closed up three-tenths of a percent. And European shares are mostly in the red as investors keep tabs on signs of progress on trade talks ahead of the July 9th deadline. Now, there's been a bit of controversy in the fashion industry. The Italian fashion house Prada has acknowledged that its new sandal design is Indian-inspired.

after its Milan runway sparked backlash. The open-toe shoes looked strikingly similar to Kalapuri chapels, a traditional handcrafted slipper sold in Indian markets. The BBC's Archana Shukla has been looking into this. Hi, Archana. Hi, Leanna. How has the story come about? This...

happened when Prada showcased a pair of leather sandals in their recent summer collection for 2026 in a show in Milan. And those leather sandals, these are open-toed sandals, they had a striking resemblance to...

The Kolhapuri chappals that are a regular footwear here in India. And there has been a lot of uproar online talking about how Prada has taken design elements from India's very heritage sandal, but

but without giving any acknowledgement or giving any credit to the local artisans. There are very regular chappals, slippers that all of us Indians have worn or wear on a regular basis. They're very cheap, but they're handcrafted and they're leather. That's what brings in the unique beauty and there is a unique design to it. What about Prada? What has Prada said about this?

So after a lot of online backlash and in fact even the industry groups from India as well as the Minister of Commerce from the state of Maharashtra writing to Prada asking about why there was no acknowledgement or credit given to the local craftsmanship for this product,

Prada actually sent out a statement acknowledging that these sandals are inspired by the traditional Indian footwear and that they are committed to responsible design practices. And in fact, they've said that they are speaking with the local artisans and they want to have a more meaningful conversation and collaboration with the local artisans here. Although they have mentioned that

The chappals and the slippers are yet not commercial and there is still some time before those type of conversations go ahead. But you know what the most striking feature is, the lowest price at which you can buy these chappals here is about $12 or $13.

Prada has priced the similar looking slippers, which now they say has been inspired by the Indian footwear, for over $1,000. Wow. And that also is something where people have found it appalling. They've also found it very striking that a cultural design from a heritage product has been picked up

by a big fashion brand without any acknowledgement and credit. I guess that's just the price of a logo. OK, the BBC's Archana Shukla, thank you so much for joining us on Marketplace. Thank you, Liana. And finally, the tennis tournament Wimbledon is underway in London. And for the first time in 148 years, there are no line judges. They've been replaced by cameras and sensors calling the shots. And since it's set to be the hottest opening day on record...

I hope the tech can handle the heat. And that's it from the Marketplace Morning Report from the BBC World Service. Craig Henderson is my producer, James Graham's the editor, and I'm Leanna Byrne. Have a great day. Thanks for listening. Greetings, Marketplace listeners. It's Neil Scarborough, Vice President and General Manager of your favourite business shows. I'm coming to you today with an opportunity to help shape the future of economic journalism and philanthropy.

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