The United States has listed the Online News Act, Online Streaming Act, and Digital Services Tax as trade barriers (longstanding trade irritants).
You’ll probably not see this as part of any mainstream media news broadcast. The United States has singled out the Online News Act, the Online Streaming Act, and the Digital Services Tax as trade barriers. This has been published on the United States Trade Representative (USTR) official website which can be found here. Alternatively, you can read the full report here (PDF). The USTR described this report as follows:
Today, the Office of the United States Trade Representative (USTR) submitted the 2025 National Trade Estimate (NTE) to President Trump and Congress. The NTE is an annual report detailing foreign trade barriers faced by U.S. exporters and USTR’s efforts to reduce those barriers.
So, basically, the report lists off what the US views as trade barriers around the world. Sure enough, the Online News Act, the Online Streaming Act, and the Digital Services Tax all crop up as trade barriers in the report. First, the Online News Act which got its own paragraph in the report:
Mandatory Bargaining Code
On June 22, 2023, the Canadian Government passed the Online News Act (Bill C-18). Under the Act, designated platform services companies are required to engage in negotiations with Canadian news providers to pay the news businesses for content accessed via certain services offered on the companies’ digital platforms. The Act gives the gives the CRTC new powers to regulate the Canadian news industry, including determining who is a journalist, what is an eligible news business, and calculating compensation. The United States continues to monitor this issue.
The Online News Act has long been considered a trade barrier as the US has said in the past that this is a violation of the USMCA/CUSMA. This is because the Act specifically targets American companies. In this case, the US is not wrong on that. After all, the Act explicitly targets Meta and Google which are both, well, American companies. No other company is targeted for demands of payments (for completely stupid reasons no less).
Next up is the Online Streaming Tax. The report specifically says this about this being a trade barrier:
Online Streaming
The Canadian Government passed the Online Streaming Act on April 27, 2023, amending the Broadcasting Act to give the CRTC authority to impose conditions on the operation of online streaming platforms. The Canadian Government instructed the CRTC to create a methodology for financial contributions and obligations on streaming platforms to support and promote Canadian programming, and to prioritize a review of how it defines Canadian programs given the foundational nature of these definitions to the regulatory framework. On June 4, 2024, before beginning a review of the definitions, the CRTC announced
that streaming services would be required to contribute five percent of their Canadian revenues to support the Canadian broadcasting system, beginning in the broadcast year 2024 to 2025. The rules include criteria that, based on available information, may effectively exclude Canadian streaming services from the new obligations, and under current definitions, would prevent U.S. suppliers from accessing the funding mechanisms that they will pay into. The United States will closely monitor the implementation of the Act and any USCMA implications.
Indeed, the Online Streaming Act is currently going through the CRTC (Canadian Radio-television and Telecommunications Commission), so it is currently in the process of being implemented. As a result, legal challenges are currently waiting in the wings. Not a whole lot can be done about the horrendous Online Streaming Act until the CRTC is finished their consultation period and implementation of the Act. I’ve long argued that the Online Streaming Act is basically a legal challenge waiting to happen since it basically violates Canadian Charter rights such as freedom of expression protections. So, this law has long been problematic and is basically a legal ticking time bomb. Not really surprising that it is also a major weakness for Canadian trade as well given that, like the Online News Act, targets American businesses.
Finally, there is the Digital Services Tax. If you thought that the US had a lot to say about why the Online News Act and Online Streaming Act is a trade barrier, well, that pales in comparison to what they have to say about the Digital Services Tax:
Digital Services Taxation
On June 20, 2024, Canada enacted a digital services tax (DST), imposing a three percent levy on certain gross revenues relating to online marketplaces, online targeted advertising, social media platforms, and user data. The DST entered into force on June 28, 2024. Canada’s DST is retroactive to January 1, 2022, and companies are required to remit payments starting on June 30, 2025. The DST applies to taxpayers with annual global revenues of €750 million (approximately $833 million) and Canadian digital services revenue of CA$20 million (approximately $14.3 million).As the United States noted in comments to Canada in 2021 and 2023, most DSTs have been designed in ways that discriminate against U.S. companies, as they single out U.S. firms for taxation while effectively excluding national firms engaged in similar lines of business. Furthermore, Canada’s DST creates significant retroactive tax liabilities with immediate consequences for U.S. companies. Though Canada had joined the October 8, 2021, OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting Statement on a Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalization of the Economy, which called for all Parties to commit not to introduce DSTs in the future, Canada subsequently declined to join the July 2023 Inclusive Framework “Outcome Statement” that extended that commitment.
Through bilateral and multilateral engagement, the United States continued to raise serious concerns regarding Canada’s DST and to encourage Canada to withdraw or repeal the DST. On August 30, 2024, USTR announced that the United States requested dispute settlement consultations with Canada under the USMCA regarding Canada’s DST. On January 20, 2025, the United States issued a White House Memorandum titled, “The Organization for Economic Co-Operation and Development (OECD) Global Tax Deal (Global Tax Deal).” The memorandum stated:The Secretary of the Treasury and the Permanent Representative of the United States to the OECD shall notify the OECD that any commitments made by the prior administration on behalf of the United States with respect to the Global Tax Deal have no force or effect within the United States absent an act by the Congress adopting the relevant provisions of the Global Tax Deal.
On January 22, 2025, appropriate representatives of the Treasury Department provided notice to the Director of the Centre of Tax Policy and Administration at the OECD. On January 24, 2025, the U.S. Permanent Delegation to the OECD provided similar notice to the Secretary General of the OECD.
Indeed, we’ve noted the trade dispute panel request when it first came to light last year before Trump took power. This came after numerous warnings and letters specifically directed at Canada over these very issues. What’s more, the warnings come from both Republican and Democrats, so this isn’t even a partisan issue. Everyone seems to agree that Canada’s Digital Services Tax was horribly implemented. After all, it was Canada that flipped off the rest of the world as everyone else was negotiating a way to tax large tech platforms. The Digital Services Tax was a way for Canada to basically scream “I do what I want and don’t care about anyone else”. So, zero surprise that other countries are reacting so negatively to the Digital Services Tax among other things.
How this all fits into the Trump administrations efforts to basically break down international trade really makes discussing this a bit weird. The thing about this is that all three laws have been subjected to challenges from the United States long before Trump took power. As a result, Canada basically weakened its position on the trade front as the Trump administration actually slaps unfair tariffs on, well, everyone. While the Biden administration has been challenging these laws, we know that the Trump administration, in an executive order, also challenged these laws. So, the position on this front actually hasn’t changed between the two administrations.
So, while Canada can argue (rightfully) that trade tariffs imposed on them is unfair and violates CUSMA/USMCA, the United States can retort and point to these three laws and say that Canada has enacted unfair trade practices by implementing these laws. The kicker there is that the United States wouldn’t be wrong. The Online News Act, Online Streaming Act, and the Digital Services Tax are all very likely violations of the USMCA/CUSMA. As long as these laws continue to be on the books, Canada will always have these legal weaknesses when trying to fend off these insane tariffs.
Obviously, the mainstream media in Canada don’t like to talk about this because, for them, all three are basically free money gravy trains. The last thing they want is the free money stream to go away. If anything, they are doubling down on the lies surrounding the Online News Act more than anything else. Like almost every other time this trade issue crops up, it either gets ignored completely or downplayed in some way.
The reality is that these have all been long running trade problems that the Canadian government got themselves into. There’s already action being taken to take on the Digital Services Tax on the part of the US. As the Online News Act and Online Streaming Act get implemented, that will only invite more trade retaliation from the US (after all, they explicitly say that they are monitoring the situation closely on both fronts). With Trump in the White House, that just only further increases the odds that Canada will get hit hard for all of the above.
The logical thing to do is say that all three are going to get put under review for compliance with all international trade obligations. This as the Canadian government engages with the US government to hash out how it would be possible to implement these laws without causing trade issues. I sincerely doubt that would happen given that Canada has long been ignoring the US government on all three laws up to this point. So, I can only expect each law to blow up in Canada’s face at a time when the Canadian government needs to be handling the United States from a position of strength.
