The DST imposes a 3% tax on revenue from certain digital services that depend on user engagement, data, and content contributions. It targets companies with global revenues of €750 million or more and Canadian digital services revenue exceeding CAD 20 million. The tax is retroactive to January 1, 2022, but will only be payable from June 30, 2025.

Canada defends the DST by arguing that foreign companies making huge profits off Canadian users should pay a part of those earnings. The tax is expected to bring in around $875 million annually for Canada, totaling CAD 7.2 billion over five years. However, the US Trade Representative (USTR) has previously found such taxes discriminatory against American firms and proposed retaliatory tariffs on countries with similar taxes.

The US Chamber of Commerce has slammed the DST as "discriminatory" and against international tax principles. They argue it violates Canada's obligations under the United States-Mexico-Canada Agreement (USMCA) and World Trade Organization rules. Earlier this month, Canadian Finance Minister Francois-Philippe Champagne said Parliament had passed the DST and the government would proceed with its implementation despite US opposition.

While France, Italy, Spain, and the United Kingdom all have tax regimes in place, the US is mulling drastic steps. Trump has described the move online as "a direct and blatant attack on our country." Meanwhile, large companies such as Amazon, Apple, Airbnb, Google, Meta, and Uber will be taxed at three percent on the money they earn from Canadian users and customers.