From the moment it was first introduced as Bill C-10 in the fall of 2020, it was readily apparent that mandated payments by foreign streaming services to support Canadian content would face a trade backlash with the U.S., with the real prospect of trade retaliation. In fact, I wrote about the issue days after the bill was tabled, warning that an uneven playing field for benefits – foreign companies required to contribute but banned from benefiting – was a risky approach. Those warnings were dismissed by the government, cultural lobby groups, and supporters of the bill who assured critics that Canada’s cultural exemption under CUSMA provided a shield against U.S. retaliation.
It took years for Bill C-10 – later Bill C-11 – to become law as the Online Streaming Act, but now the bill has come due. Weeks after the U.S. Trade Representative (USTR) specifically identified Canadian digital laws as a target in CUSMA renegotiations, House Republicans introduced the Protecting American Streaming and Innovation Act, a bill that would mandate an investigation into the Canadian law and open the door not only to trade retaliation but also to a change in how the cultural exemption is applied.
The bill, introduced by Rep. Lloyd Smucker of Pennsylvania, who also led a 2025 Ways and Means letter demanding the law’s suspension, would direct the USTR to launch a Section 301 investigation within 30 days of enactment to determine whether the Online Streaming Act is unreasonable or discriminatory and burdens U.S. commerce. Further, it lays out detailed Congressional findings that read as a roadmap for a trade confrontation, includes a mandatory retaliation mechanism, and extends its framework to any other country with a U.S. free trade agreement that adopts similar measures.
The bill’s preamble, which enumerates Congressional findings, is worth reading in full. If this becomes law, Congress finds that the Online Streaming Act results in a “revenue-based tax that targets American companies,” and that audio streaming companies are effectively required to “pay twice” because royalties paid to Canadian rights holders are included in the taxable revenue base. It characterizes discoverability obligations as requiring “costly and technically burdensome platform modifications, including the implementation of invasive data collection and reporting systems.” Most significantly, it targets Canada’s longstanding cultural defence, arguing that the CUSMA cultural industries exception “retains a legacy definition of ‘cultural industry’ centered on traditional publishing, recordings, and broadcasting, rather than modern means of digital delivery.”
The enforcement provisions are equally aggressive. If USTR makes an affirmative finding, Canada would have 180 days to remedy the discriminatory measures. If it fails to do so, the bill mandates retaliatory action under Section 301(c), which could include suspending CUSMA trade benefits or imposing additional duties on Canadian goods. The bill also requires quarterly reports to Congress for two years. And Section 6 extends the entire investigation-and-retaliation framework to any FTA partner that takes similar actions, explicitly flagging Australia, Brazil, and Israel and sending the message that Canada is the test case for a global enforcement template.
The bill does not arrive in a vacuum. It is the culmination of a steadily intensifying U.S. campaign that stretches back years. In July 2022, I flagged that the USTR had raised concerns about then-Bill C-11 during a meeting with Canada’s trade minister, a development the Canadian readout notably omitted. In May 2024, a bipartisan group of nineteen Ways and Means members warned the law would create trade barriers for U.S. streaming services. Earlier this month, the USTR’s 2026 Trade Policy Agenda identified the Online Streaming Act by name, stating that Canada “maintains discriminatory and restrictive digital measures, including its Online Streaming Act,” placing it alongside dairy as the headline issues for the CUSMA joint review scheduled for July 1, 2026.
The bill’s prospects in Congress are uncertain, but its significance lies less in passage than in the signal it sends. Concerns about the bill date back to the Biden administration, but it is no secret that the Trump administration has been aggressively deploying Section 301 investigations following the Supreme Court’s ruling last month striking down some of its earlier tariff actions. The Smucker bill provides a ready-made blueprint, complete with findings that the USTR could easily adopt.
For anyone watching Canada’s digital policy trajectory, the pattern should be painfully familiar. The government talks tough, dismisses warnings of retaliation, and scrambles for an exit when consequences arrive. That was the playbook with the digital services tax, where the government spent years insisting it could avoid retaliation, then caved to U.S. pressure in June 2025. As I argued at the time, the government misread the tech sector and played its card too early rather than incorporating the DST into a broader negotiation as the UK managed to do. The same strategic error is playing out with the streaming law, which, years after its introduction and despite its not yet being fully in force, has sparked multiple court challenges and is now a central target of the U.S. trade agenda.
The cultural exemption that Canadian officials have long pointed to as their trump card permits Canada to adopt cultural policies that would otherwise violate CUSMA, but it also gives the U.S. the right to retaliate with measures of equivalent commercial effect that can target any industry, such as dairy, lumber, or steel. Moreover, this bill goes further, challenging whether the exemption even applies to modern digital services. That is a qualitative escalation that should alarm anyone who assumed the exemption was settled law.
None of this was inevitable. There is room for a modernized broadcasting framework that supports Canadian content without triggering a trade war. But that requires an approach that does not treat streamers simply as policy ATMs for large cash withdrawals. Rather, we need a realistic assessment of the state of the Canadian film and TV sector, an accounting for the existing contributions of foreign streamers, and non-discriminatory regulatory frameworks. The Online Streaming Act was always risky policy and now it appears the entire statute is in jeopardy.
