The Canadian political and business communities are unsurprisingly focused on the prospect of U.S. President Donald Trump instituting 25% tariffs on Canadian goods and services. The threat of tariffs, which could spark a retaliatory response by Canada and fuel a damaging trade war, would likely cause serious harm to the Canadian economy. But tariffs aren’t the only story arising from new Trump actions in his first day in office. Amidst the many executive orders signed on day one are several with significant implications for Canadian law, particularly Canadian digital policies such as the digital services tax, mandated streaming payments arising from Bill C-11, and mandated payments for news links due to Bill C-18. When combined the government’s decision to prorogue Parliament earlier this month, the results of years of Canadian digital laws and policies now largely fall into two groups: those that have died due to prorogation and those that are likely to die due to Donald Trump.
The effect of prorogation on digital law and policy is difficult to overstate. The Liberal government rarely prioritized the issue which ultimately doomed longstanding efforts at privacy reform, AI regulation, online harms measures, cybersecurity safeguards, and online age verification requirements. For example, then-ISED Minister Navdeep Bains introduced Canada’s Digital Charter in May 2019. It served as the basis for privacy reform, first in 2020 in Bill C-11 and later in Bill C-27, which was tabled in June 2022. Despite years of work, multiple consultations, and dozens of hearings, that bill is now dead, having never even made it to a final vote in the House of Commons. The death of Bill C-27 also means that the government’s poorly developed effort at artificial intelligence regulation is also finished, perhaps for good given the U.S. shift toward more lightweight AI regulatory rules. Bill C-63, the online harms bill, shares a similar fate, having taken years to be introduced and never having made it to committee for further study. Bill S-210, the age verification bill, only needed a third reading vote in the House of Commons to pass having earlier passed in the Senate, but delays in House business throughout the fall thankfully killed that bill. And then there is Bill C-26, the cyber-security bill, which passed the House and would have passed the Senate if not for a drafting error that was spotted late in the process and which would have nullified a large portion of the bill. It required only a numbering amendment, but now the entire bill is dead.
While bills that did not pass are dead due to prorogation, much of the remaining digital policy agenda that became law is now at risk given the likelihood of U.S. retaliation. The Liberal government premised much of that legislation – online streaming, online news, and the digital services tax – on making tech companies pay, whether through increased taxes or cross-industry subsidies designed to support the Canadian cultural or news sectors. The U.S. Administration under President Biden registered concerns with digital services taxes, but President Trump has served notice that he is ready to take action given that the vast majority of costs are borne by U.S. companies.
The most obvious target is the digital services tax, which took effect on a retroactive basis dating back to 2022 last year. The first payments are due in July with estimates that the revenues from the DST could run into the billions of dollars. The U.S. has already filed for dispute resolution on the DST, but one of President Trump’s executive orders calls for investigations of any foreign countries that “have any tax rules in place, or are likely to put tax rules in place, that are extraterritorial or disproportionately affect American companies.” The Canadian DST surely qualifies and Canada’s bet that retaliation was a bluff predictably looks like a bad one. Given the efforts of the major tech companies to curry favour with the new U.S. administration, expect the elimination of the tax to emerge as a key U.S. demand. The U.S. unlikely to stop there, however. The mandated streaming payments under Bill C-11 (currently frozen due to a legal challenge) have been characterized as a streaming tax by opponents, while the online news bill was framed as a link tax. U.S. companies are again the primary target of these payments. Even if the U.S. concludes that these aren’t taxes, another executive order on America First Trade calls for a review of the USMCA, making these rules a potential target in any future trade negotiation. In fact, President Trump is reportedly anxious to expedite review of the trade deals.
Canada now finds itself in an untenable position when it comes to digital policy. Years of tough talk on making “web giants pay” is likely to give way to concessions in the face of even tougher talk from President Trump that could create economic threats that far surpass the potential benefits of largely ill-advised policies. Further, even issues that fall below the U.S. radar screen are also dead, victims of a combination of political disinterest (C-27), miscalculation (C-63), or mistakes (C-26). The risks associated with these policies were evident from the start but the government instead claimed that its approach would create a model that others would emulate. Today it appears that little will remain of a digital policy agenda that is either dead or likely to die.
Cory Doctorow has the right idea at https://pluralistic.net/2025/01/15/beauty-eh/#its-the-only-war-the-yankees-lost-except-for-vietnam-and-also-the-alamo-and-the-bay-of-ham – If the US does institute tariffs, Canada should respond by scrapping legal protection for TPMs and selling interoperability and repair tools. After all, those laws were enacted to appease the US…
An interesting concept, but I can’t see it as a viable threat. I do see a potential issue in retaliation from the US if Canada did this.
The retaliation could come in the form of energy, specifically gasoline and natural gas. In the case of gasoline, we ship crude (at a price below the global price) from Alberta to the US gulf states, where it is refined and then exported to other countries, including back to Canada, because we don’t have the refining capacity domestically. For LNG, Ontario and Quebec nixed the expansion of the pipeline that would have bypassed the US to ship the LNG to Ontario and Quebec. That has resulted in LNG being shipped by way of pipelines that traverse the US. That makes Canada vulnerable to American retaliation by simply shutting off the flow, during the heating season… In theory propane could be used to heat (in fact this occurs in much of rural Ontario and Quebec already), however the experience of the rail blockades in 2020 showed that we are vulnerable there too; because propane is primarily shipped by rail, the blockade shut off the flow to eastern Canada, causing the rationing of propane during the heating season, something that was mostly ignored in the main stream media.
What it does point to, however, is the fact that Canada needs to diversify the customer base for our resources as well as develop alternate transport routes in the name of DJT’s favourite excuse, national security, and develop a sufficient domestic capacity for refining crude oil into useful products, in short, energy self-sufficiency. Unfortunately decades of a lack of political will to make the tough decisions has come back to bite us in the butt (and I’m not talking about Gerald or Brent here).
I meant to reply to this comment. See my reply elsewhere in this comment section.
Perhaps we could reverse the public domain change as well …
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Trump will destroy Canada.
I think reform of the digital-lock rules is surely needed. However to my knowledge sanctions against intellectual property do not have a good track record of actually working. If I remember correctly Antigua, in their dispute regarding online gambling with the US received ‘special permission’ from the WTO over 15 years ago to violate $21 million in value of US copyrights annually however it has not been implemented (yet?). I think it is both an attempt at negotiating a diplomatic solution at the table and ensuring that if they did attempt to implement it they follow the letter to the law so the US government cannot complain they would be violating the agreement (how does one violate a set threshold of copyright anyway?).
Perhaps being *just* about the digital-lock provisions while still respecting copyright might fair better.
The Liberal government consistently pushed privacy reform to the back burner, undermining years of hard work and ultimately sealing its fate.
Years of Canadian digital policy face stagnation or demise due to inconsistent implementation and political challenges. Efforts to modernize have struggled with bureaucratic hurdles and lack of clear vision. This mirrors issues in areas electrical panel upgrade in Madera, CA is needed for better infrastructure but faces similar delays and resistance.
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