The United States will resume trade negotiations with Canada immediately after Ottawa scrapped its digital services tax targeting American technology firms, White House economic adviser Kevin Hassett said on Monday.

"Absolutely," Hassett said on Fox News Channel when asked about the talks restarting.

US President Donald Trump had asked Canada to drop the tax at a G7 meeting in Canada earlier in June, Hassett said.

"For sure, that means that we can get back to the negotiations," he added.

White House press secretary Karoline Leavitt told reporters that Canadian Prime Minister Mark Carney called Trump on Sunday evening to tell him the tax was being dropped, calling it a big victory for US tech companies.

"Very simple. Prime Minister Carney in Canada caved to President Trump and the United States of America," she said, crediting Trump's hard-line negotiating style for the shift.

Canada halted its plans to begin collecting a new digital services tax targeting US technology firms just hours before this was due to start on Monday in a bid to advance stalled trade negotiations with the US.

Canada's finance ministry said late on Sunday that Carney and Trump would resume trade negotiations in order to agree on a deal by July 21.

Stocks hit record highs on Wall Street on Monday morning as sentiment in the markets rose amid optimism about US trade negotiations with key partners, including Canada. (Reuters)