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Canada is proceeding with its Digital Services Tax (DST), a 3% levy on revenue earned in Canada by large digital corporations, despite escalating threats of retaliatory tariffs from the United States. The U.S. government argues the tax unfairly targets American tech giants and is preparing potential countermeasures. The Canadian government defends the tax as a matter of fairness, ensuring that companies profiting from Canadian users contribute their fair share. This standoff places significant strain on Canada-U.S. trade relations and could have wide-ranging economic consequences for key Canadian export sectors if tariffs are imposed.