Business
Carney’s Digital Tax Debacle: How Ottawa Triggered a Trade Fallout with Washington
Trump walked away from trade talks over Canada’s retroactive digital services tax—enacted by Mark Carney’s Liberal government despite clear warnings from experts, businesses, and industry leaders.
Donald Trump has officially walked away from the negotiating table. The trigger? Canada’s ill-conceived Digital Services Tax (DST)—a reckless, retroactive grab for revenue targeting U.S. tech firms. Trump isn’t mincing words: he’s calling it a “blatant, discriminatory attack” on American innovation, and now he’s moving to punish Canada economically for it.
So what exactly is this tax?
The Digital Services Tax, passed by the Liberal government and implemented under Mark Carney’s leadership, applies a 3% levy on revenue—not profits—earned by large digital firms operating in Canada. And it’s retroactive. That means it’s being applied to earnings from as far back as January 1, 2022, with companies forced to make lump-sum payments by June 30, 2025.
This tax specifically targets companies with global revenue of at least €750 million and Canadian digital revenue of at least CAD 20 million. Translation: It’s a direct hit on American giants like Google, Amazon, Meta, Airbnb, and Uber, and it spares Canadian firms and EU-based entities from equivalent exposure. It’s not tax fairness—it’s protectionism with a smiley-face sticker.
Trump has responded in kind. As of June 27, all trade negotiations with Canada are suspended. Retaliatory tariffs—already mounting since February—are set to escalate. Trump is drawing a red line, and he’s daring Canada to cross it.
What’s at stake?
Everything. Canada sends over 75% of its exports to the United States. We’re talking about nearly a trillion dollars in annual trade. With Trump now actively leveraging tariffs and ending negotiations, entire sectors—from automotive to agriculture, energy to manufacturing—are in the crosshairs.
Already this year, Trump has slapped 25% tariffs on Canadian imports, with specific hits to steel, aluminum, vehicles, and auto parts, and 10% tariffs on Canadian oil, gas, and potash. These moves have already disrupted markets. Ending trade negotiations is a body blow to an already wobbly Canadian economy—still reeling from Trudeau-era mismanagement and Carney’s corporate globalist agenda.
So who could have seen this coming?
Almost everyone.
In testimony before the House of Commons Standing Committee on International Trade on June 11, 2024, Dr. Meredith Lilly, Associate Professor and Simon Reisman Chair in International Economic Policy at Carleton University, issued a precise and deeply informed warning about Canada’s Digital Services Tax (DST).
Dr. Lilly, a leading authority on North American trade, emphasized that unilateral implementation of a DST would “discriminate against large U.S. firms” and could trigger U.S. retaliation under the Canada-United States-Mexico Agreement (CUSMA). Her words were clear:
“Unilateral action by Canada to introduce a digital services tax would discriminate against large U.S. firms. We should be prepared for U.S. retaliation if these measures are enacted, and Canadian lawmakers should be aware of the damaging consequences for the broader CUSMA review process.”
She explained that such policy moves could provoke formal dispute resolution under CUSMA Chapter 31 and complicate the 2026 review of the trade agreement. Dr. Lilly stated unequivocally:
“Both of these things [the Online Streaming Act and the DST] will complicate the process and result in a full review if they aren’t addressed before then.”
This wasn’t a political shot—it was an expert diagnosis. Dr. Lilly’s analysis made it crystal clear: if Canada chose to proceed with a retroactive, discriminatory tax on U.S. digital firms, the blowback from Washington wouldn’t wait until 2026. It would come sooner. And it did—on June 27, 2025, President Trump pulled the plug on all trade talks with Canada, citing the DST as a direct affront to American companies and fair trade principles.
In a June 2024 committee hearing, MP Kyle Seeback pressed experts on the fallout of Trudeau-era policies like the Digital Services Tax, asking bluntly:
“If these all go through and are implemented, as it looks like the current government wants to do, will it make the CUSMA review easier or more complicated?”
Dr. Meredith Lilly didn’t mince words:
“If the online streaming act and the digital services tax move forward, I fully expect action to happen before the 2026 review. I think the Americans will respond.”
So Kyle Seeback saw it. Meredith Lilly warned about it. But this wasn’t just a red flag waved by a few policy experts or MPs in a backroom committee. No—Canada’s entire business community was screaming from the rooftops about the catastrophic implications of the Digital Services Tax.
Let’s be clear: this wasn’t some quiet objection buried in legalese. It was a full-blown economic revolt.
The Canadian Chamber of Commerce called it out as early as September 2023, warning that the tax would raise prices on digital services, hammer consumers, and almost certainly provoke retaliatory tariffs from the United States—a country that, I might remind you, accounted for $960.9 billion in bilateral trade in 2022 alone.
The Retail Council of Canada joined the fight in June 2025, warning that retailers and everyday Canadians would be caught in the crossfire of U.S. retaliation. The Business Council of Canada didn’t mince words either, saying the tax carried “serious economic consequences” and “a high risk of sparking a trade dispute”—exactly what happened when Donald Trump walked away from trade negotiations.
And it didn’t stop there.
The Canadian Bankers Association, Canadian Life and Health Insurance Association, Canadian Venture Capital Association, and Future Borders Coalition all signed a joint letter in June 2025 pleading with Mark Carney’s government to hit pause. They warned of massive financial disruptions, threats to investment stability, and damage to border operations.
This wasn’t lobbying. It was a desperate attempt to prevent economic self-harm.
Even the groups who typically tread lightly around Ottawa saw the writing on the wall. They were begging for sanity. And what did the Liberal government do? They shoved the tax through anyway—retroactive to 2022—and waited for the backlash.
Well, it came. Trump walked. Tariffs hit. Negotiations died. And Canada’s business leaders, from Bay Street to the border crossings, are now left to deal with the fallout they predicted—and Trudeau’s team ignored.
You were told the Liberals were the “adults in the room.” That they could navigate Trump. That they understood diplomacy, trade, and economics. But let’s be honest—an eight-year-old could have seen this coming. You slap a retroactive tax on American companies, and you expect no consequences? That’s not strategy. That’s stupidity.
This entire debacle is proof that the Liberal Party is utterly incapable of negotiating with strength. They don’t understand leverage, they don’t understand power, and they clearly don’t understand how to protect Canada’s economic interests. Mark Carney, Trudeau’s handpicked heir, isn’t some master tactician—he’s a globalist relic from 2008, still clinging to failed ideas and the fantasy of technocratic rule.
Unfortunately for him—and for us—this isn’t 2008 anymore. The world has changed. Trump is back, the rules are different, and while other countries pivot, adapt, and push back, Canada’s Liberal government is stuck in the past. Rigid, arrogant, and dangerously out of touch.
What we’re witnessing isn’t just a policy failure. It’s the collapse of a worldview—the end of the Liberal fantasy that globalist tax schemes, virtue signaling, and bureaucratic arrogance can substitute for real leadership. And it’s playing out in real time: with lost jobs, broken trade relationships, and Canada’s economic credibility circling the drain.
But here’s the good news: Canadians are waking up.
The Liberal government, now clinging to a minority held together by duct tape and desperation, won’t be around for long. The legacy media can’t protect them forever. The echo chamber of downtown Toronto can’t drown out the truth spilling out from small towns, border communities, and every corner of the real Canada.
This is a patriotic call to action. The sooner an election is called, the better. Because Canada cannot afford more of this. We cannot afford a government that punishes productivity, antagonizes our closest ally, and drives our economy into a wall—all while patting itself on the back for “moral leadership.”
It’s time to turn the page. Time to elect leaders who understand strength, who prioritize prosperity, and who don’t bend the knee to unelected bureaucrats in Brussels or Davos. Canada needs a government that fights for our interests—not the interests of Silicon Valley tax envy or UN think tanks.
The collapse has begun. Now it’s up to Canadians to finish the job—and rebuild this country with pride, purpose, and power.
From the Brownstone Institute
Cigarettes kill nearly half a million Americans each year. Everyone knows it, including the Food and Drug Administration. Yet while the most lethal nicotine product remains on sale in every gas station, the FDA continues to block or delay far safer alternatives.
Nicotine pouches—small, smokeless packets tucked under the lip—deliver nicotine without burning tobacco. They eliminate the tar, carbon monoxide, and carcinogens that make cigarettes so deadly. The logic of harm reduction couldn’t be clearer: if smokers can get nicotine without smoke, millions of lives could be saved.
Sweden has already proven the point. Through widespread use of snus and nicotine pouches, the country has cut daily smoking to about 5 percent, the lowest rate in Europe. Lung-cancer deaths are less than half the continental average. This “Swedish Experience” shows that when adults are given safer options, they switch voluntarily—no prohibition required.
In the United States, however, the FDA’s tobacco division has turned this logic on its head. Since Congress gave it sweeping authority in 2009, the agency has demanded that every new product undergo a Premarket Tobacco Product Application, or PMTA, proving it is “appropriate for the protection of public health.” That sounds reasonable until you see how the process works.
Manufacturers must spend millions on speculative modeling about how their products might affect every segment of society—smokers, nonsmokers, youth, and future generations—before they can even reach the market. Unsurprisingly, almost all PMTAs have been denied or shelved. Reduced-risk products sit in limbo while Marlboros and Newports remain untouched.
Only this January did the agency relent slightly, authorizing 20 ZYN nicotine-pouch products made by Swedish Match, now owned by Philip Morris. The FDA admitted the obvious: “The data show that these specific products are appropriate for the protection of public health.” The toxic-chemical levels were far lower than in cigarettes, and adult smokers were more likely to switch than teens were to start.
The decision should have been a turning point. Instead, it exposed the double standard. Other pouch makers—especially smaller firms from Sweden and the US, such as NOAT—remain locked out of the legal market even when their products meet the same technical standards.
The FDA’s inaction has created a black market dominated by unregulated imports, many from China. According to my own research, roughly 85 percent of pouches now sold in convenience stores are technically illegal.
The agency claims that this heavy-handed approach protects kids. But youth pouch use in the US remains very low—about 1.5 percent of high-school students according to the latest National Youth Tobacco Survey—while nearly 30 million American adults still smoke. Denying safer products to millions of addicted adults because a tiny fraction of teens might experiment is the opposite of public-health logic.
There’s a better path. The FDA should base its decisions on science, not fear. If a product dramatically reduces exposure to harmful chemicals, meets strict packaging and marketing standards, and enforces Tobacco 21 age verification, it should be allowed on the market. Population-level effects can be monitored afterward through real-world data on switching and youth use. That’s how drug and vaccine regulation already works.
Sweden’s evidence shows the results of a pragmatic approach: a near-smoke-free society achieved through consumer choice, not coercion. The FDA’s own approval of ZYN proves that such products can meet its legal standard for protecting public health. The next step is consistency—apply the same rules to everyone.
Combustion, not nicotine, is the killer. Until the FDA acts on that simple truth, it will keep protecting the cigarette industry it was supposed to regulate.
Author
From the Canadian Energy Centre
By Will Gibson
“The refining industry wants heavy oil. We are actually in a shortage of heavy oil globally right now, and you can see that in the prices”
Once priced at a steep discount to its lighter, sweeter counterparts, Canadian oil has earned growing admiration—and market share—among new customers in Asia.
Canada’s oil exports are primarily “heavy” oil from the Alberta oil sands, compared to oil from more conventional “light” plays like the Permian Basin in the U.S.
One way to think of it is that heavy oil is thick and does not flow easily, while light oil is thin and flows freely, like fudge compared to apple juice.
“The refining industry wants heavy oil. We are actually in a shortage of heavy oil globally right now, and you can see that in the prices,” said Susan Bell, senior vice-president of downstream research with Rystad Energy.
A narrowing price gap
Alberta’s heavy oil producers generally receive a lower price than light oil producers, partly a result of different crude quality but mainly because of the cost of transportation, according to S&P Global.
The “differential” between Western Canadian Select (WCS) and West Texas Intermediate (WTI) blew out to nearly US$50 per barrel in 2018 because of pipeline bottlenecks, forcing Alberta to step in and cut production.
So far this year, the differential has narrowed to as little as US$10 per barrel, averaging around US$12, according to GLJ Petroleum Consultants.
“The differential between WCS and WTI is the narrowest I’ve seen in three decades working in the industry,” Bell said.
Trans Mountain Expansion opens the door to Asia
Oil tanker docked at the Westridge Marine Terminal in Burnaby, B.C. Photo courtesy Trans Mountain Corporation
The price boost is thanks to the Trans Mountain expansion, which opened a new gateway to Asia in May 2024 by nearly tripling the pipeline’s capacity.
This helps fill the supply void left by other major regions that export heavy oil – Venezuela and Mexico – where production is declining or unsteady.
Canadian oil exports outside the United States reached a record 525,000 barrels per day in July 2025, the latest month of data available from the Canada Energy Regulator.
China leads Asian buyers since the expansion went into service, along with Japan, Brunei and Singapore, Bloomberg reports. 
Asian refineries see opportunity in heavy oil
“What we are seeing now is a lot of refineries in the Asian market have been exposed long enough to WCS and now are comfortable with taking on regular shipments,” Bell said.
Kevin Birn, chief analyst for Canadian oil markets at S&P Global, said rising demand for heavier crude in Asia comes from refineries expanding capacity to process it and capture more value from lower-cost feedstocks.
“They’ve invested in capital improvements on the front end to convert heavier oils into more valuable refined products,” said Birn, who also heads S&P’s Center of Emissions Excellence.
Refiners in the U.S. Gulf Coast and Midwest made similar investments over the past 40 years to capitalize on supply from Latin America and the oil sands, he said.
While oil sands output has grown, supplies from Latin America have declined.
Mexico’s state oil company, Pemex, reports it produced roughly 1.6 million barrels per day in the second quarter of 2025, a steep drop from 2.3 million in 2015 and 2.6 million in 2010.
Meanwhile, Venezuela’s oil production, which was nearly 2.9 million barrels per day in 2010, was just 965,000 barrels per day this September, according to OPEC.
The case for more Canadian pipelines
Worker at an oil sands SAGD processing facility in northern Alberta. Photo courtesy Strathcona Resources
“The growth in heavy demand, and decline of other sources of heavy supply has contributed to a tighter market for heavy oil and narrower spreads,” Birn said.
Even the International Energy Agency, known for its bearish projections of future oil demand, sees rising global use of extra-heavy oil through 2050.
The chief impediments to Canada building new pipelines to meet the demand are political rather than market-based, said both Bell and Birn.
“There is absolutely a business case for a second pipeline to tidewater,” Bell said.
“The challenge is other hurdles limiting the growth in the industry, including legislation such as the tanker ban or the oil and gas emissions cap.”
A strategic choice for Canada
Because Alberta’s oil sands will continue a steady, reliable and low-cost supply of heavy oil into the future, Birn said policymakers and Canadians have options.
“Canada needs to ask itself whether to continue to expand pipeline capacity south to the United States or to access global markets itself, which would bring more competition for its products.”
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