Since Prime Minister Carney called off trade negotiations with the US last Friday, much of the coverage has focused on the physical goods now affected by Trump's 50% tariffs. Beer! Hockey sticks! Essential oils for some reason! But the true stakes of this trade war are overwhelmingly digital.
A quick recap for those blessedly out of the loop: Last month, the White House announced 50% tariffs on a spate of Canadian exports, retaliating against Canada’s supposed “discriminatory treatment of American products,” particularly American alcohol (which many Canadian provinces pulled from the shelves after Trump’s first wave of tariffs) and dairy products (which are limited by Canada’s supply management system). Less than two hours before tariffs were set to kick in, Trump called for a three-day pause: A deal was coming.
Except, as you likely suspect by now, a deal never came – and I, for one, am relieved. Don’t get me wrong: weathering this trade war won’t be easy. But the Prime Minister has gotten a bit too comfortable lately using our digital sovereignty as a bargaining chip, and as details of the failed agreement come out, it sounds like we almost traded big parts of it away.
The Prime Minister has gotten a bit too comfortable lately using our digital sovereignty as a bargaining chip.
Before talks broke down last week, US Trade Representative Jamieson Greer posted on X that the deal with Canada would involve “digital trade alignment.” Vass Bednar, Managing Director of the Canadian Shield Institute, immediately sounded the alarm: “If Prime Minister Carney is trading away our ability to govern the digital realm … then we are locking in a permanent state of subordination.”
Following that, Justin Ling reported for the Toronto Star that the Online News Act, the 2023 law requiring tech giants to pay Canadian outlets for hosting their news, was likely next on the chopping block. Repealing it, he argued, would “complete the dismantling of Canada’s meagre effort to rein in Big Tech.”
Canada's digital policy approach is somewhat clumsy – we frequently oscillate between prioritizing rapid innovation (like the Americans) and prioritizing caution and regulation (like the Europeans). Some of our flagship policies have been pretty unpopular. When the Online News Act first came into effect in 2023, an Angus Reid poll found that only about a quarter of Canadians wanted Ottawa to stand by the law despite pressure from companies. Nearly half felt that Canada should back down.
Three years later, the Online News Act remains polarizing. One one hand, Google agreed to a C$100 million annual payout to help sustain media outlets across the country. On the other hand, Meta still blocks Canadians from seeing news on its platforms – a serious access to information issue, given that people get their news from social media more than anywhere else on the internet. We can absolutely debate whether the Online News Act was a wise digital policy decision, but it was undoubtedly our digital policy decision, made to protect Canadian journalism (shoutout to homegrown journalism!).
As Ling and Bednar both note, our ability to set our own digital policy is what ensures our sovereignty in an era dominated by Big Tech (and Big Ego). And while Canada hasn’t backed down on the Online News Act (yet), we have repealed or gutted several other significant digital policies in the past year in an attempt to appease our increasingly volatile neighbours to the south, not to mention the tech overlords who enjoy outsized political influence.
In 2025, Canada repealed its digital services tax to help advance trade negotiations with the US. Then, in June of this year, amidst trade talks with the US, Carney asked the CRTC to remove requirements that streaming platforms put a portion of their Canadian revenue into producing Canadian content – a core component of the Online Streaming Act. Laws like this one were put in place to help Canadian film and television survive (and possibly even thrive?) rather than get swallowed up by foreign productions with bigger names and even bigger budgets.
But last Friday, Carney and his team apparently decided that enough was enough – no deal. In his speech on Aug. 22, Carney said that Canada was never prepared to “compromise on our sovereignty, the protection of the French language, or our culture … even though the United States pushed for them until the very last minute.”
Language and culture might sound separate from digital policy, but they aren’t, not when the White House pressures Canada to drop the requirement that American streaming platforms promote Canadian content to users in Canada. The US also took issue with Quebec’s Bill 109, passed in December 2025, which requires large streaming platforms to promote French-language content for users in the province. The Globe and Mail reported that these demands were one of the reasons Canada walked away from the deal.
As Erin O’Toole, former federal Conservative leader and a member of Carney’s Advisory Committee on Canada–US Relations, said on CBC’s Front Burner today, America is “trying to dictate everything about the new economy, the digital economy,” from data to cloud computing, to “a one-size-fits-all global culture policy dictated from Washington.”
Look: I’m glad Carney finally took his ball and went home. But what took so long? After a year of letting the US set Canadian tech policy, we can hardly blame the Americans for not knowing that CanCon was a line in the sand. (We can still blame them for it, just… hardly.) Sovereignty is a blurry concept; it's not just something that you either have or don’t have, but something that can be worn away over time. And digital sovereignty relies on infrastructure that's only a few decades old, which means we have to build it from the ground up. Over the past year, construction has stalled.
The trade war's economic impacts might loom large, but at least Carney finally seems to be catching on: Canada's digital future isn’t something to negotiate away in a trade deal.
