The Canada-U.S. trade talks collapsed on Friday night with 50 percent tariffs on billions of dollars in Canadian goods now in effect and Prime Minister Mark Carney promising dollar-for-dollar retaliation by early next month, supported by a strong sense of the need to defend Canadian sovereignty. The push for “digital trade alignment”, which I unpacked in a post last week, does not appear to have been a major source of contention, though Carney pointed to late U.S. demands on culture, autos, and sovereignty in a press conference over the weekend and the Globe reports that the inclusion of discoverability rule reforms was rejected by Canadian negotiators. But with the major outlines apparently agreed to, how can Canadians reconcile general agreement on digital policy with the government’s insistence that it would not budge on cultural protections?
I believe the distinction lies, at least in part, in the government and cultural sectors now viewing the issue of cultural protection differently, with the government open to cutting mandated payments for culture and news, but not moving on the power to regulate how culture is distributed and promoted. If true, that represents a significant shift since the cultural sector has long viewed payments as a cornerstone of cultural policy.
My post last week noted that the U.S. Trade Representative’s reference to “digital trade alignment” suggested formal commitments regarding the digital services tax and the Online Streaming Act, given that Canada had already conceded on both. The DST was rescinded in June 2025 just days after a Trump threat to suspend negotiations. The Online Streaming Act’s contribution framework followed this June, when the government announced plans to dismantle the CRTC’s contribution rulings, a move later confirmed in a July court filing. The Online News Act was the most obvious next target, and Justin Ling reported in the Toronto Star that publishers had been advised to prepare for the law’s demise.
These changes are major cultural policy concessions, yet Carney was emphatic in his remarks announcing the end of the talks that culture was not up for negotiation, noting that the government was not prepared to compromise its sovereignty. The Q&A with reporters provided more detail, revealing disputes over subsidies for French culture, the prevalence of French-language media online, and even bilingual labelling requirements. Canada’s Ambassador to the U.S., Mark Wiseman, went further on Sunday, confirming that the French-language dispute involved digital services, U.S.-based streaming services, and the levels of French-language content. He called Canada’s position non-negotiable, adding that companies seeking to do business in Canada “must respect that fundamental reality.” Finally, the Globe ran a story Sunday night claiming that Canada rejected Cancon rules for Internet streamers, though the policy at issue was the Online Streaming Act’s discoverability rules, rather than what is typically regarded as Canadian content requirements.
Ending the DST, the existing streamer contributions, and the Online News Act obviously seems inconsistent with the claim that culture was never on the table. But this may reveal how the government thinks about cultural policy, as it draws a distinction between mandated payments and cultural regulation. Mandated payments were once a core part of cultural policy, as there was a regulatory quid pro quo in which broadcasters benefited from their broadcast licenses and the accompanying regulatory framework (such as simultaneous substitution rules that generated hundreds of millions of dollars) and, in return, contributed a share of revenues toward the creation of Canadian content. No such quid pro quo exists for Internet streamers, as the “level the playing field” claims were always an illusion given that there were no regulatory or licensing benefits at play. Moreover, the economic claims supporting the sector were undermined by industry data showing that streamers had made massive investments in film and TV production in Canada. The policy was therefore less about cultural production and more about responding to pressure from the culture lobby. That stands in contrast to actual cultural regulation, such as mandating discoverability requirements to promote Canadian or French-language content. The government is seemingly open to shifting on the payments issues (rightly), but still declares cultural regulation off the table by defending the measures aimed at how culture is promoted and presented rather than who pays for it.
It should be noted that the Quebec dimension may have further complicated the negotiations. The U.S. objections to French-language content requirements almost certainly extend beyond the CRTC to Quebec’s Bill 109, which the National Assembly unanimously adopted last year. Once brought into force, the statute will establish a registration regime, require interfaces to be readily configurable in French, and authorize regulations governing the presence, proportion, promotion and discoverability of original French-language content. I argued last year that the bill is unconstitutional, unnecessary, and unworkable given federal jurisdiction over broadcasting and quota rules that invite content removal or market exit from the province. But leaving aside its legal vulnerabilities, Bill 109 was never the federal government’s to trade and the Quebec government would never step up to support the demand.
Some in the cultural sector, long accustomed to lobbying for ever-larger amounts of financial support, will argue that the distinction between payments and conduct is a distinction without a difference. But outside of that sector, I believe the government and the public are largely of a similar mind. The government was swayed by intense lobbying efforts, but it is not clear the public was ever happy with blocked news links on Facebook and Instagram and the risks of higher streaming prices. While mandated payments (or, more accurately, the consequences of those payments) may not be broadly popular, what enjoys deeper support is the sovereignty principle that Canada decides how culture is regulated within its borders. On that score, the government and the public now find themselves in the same place.
The implications extend well beyond Canada-U.S. trade talks. Once the government figures out how to do it, the CRTC’s Online Streaming Act reform will proceed with the existing contribution decisions set aside, but the discoverability rules will remain very much alive. The Online News Act remains in a precarious position notwithstanding the collapse of the trade talks, since the government was prepared to repeal it once and would presumably be willing to do so again.
Canada will return to the trade table at some point with an implicit position on the cultural exemption that differentiates between defending regulatory autonomy and conceding on mandated payments. There is a strong case for that approach, which abandons measures that never made policy sense while preserving the tools aimed at genuine cultural objectives, ensuring that Canada decides for itself how to regulate the production and presentation of Canadian culture.
