Carney’s “cave” to Trump on the DST roils Canadians

July 2, 2025

Mark Carney’s shock repeal of Canada’s digital services tax on the eve of Canada Day was greeted by a gloating fan-dance by President Trump’s press secretary who claimed that “Carney and Canada caved to Donald Trump and the United States of America.”

In a brief news interview the Prime Minister suggested that the corporate tax measure, designed to capture offshoring of Canadian revenues by US tech companies, was never going to be in the final trade deal that he is working on with Donald Trump. MediaPolicy expressed its view on all of this in Monday’s post.

This might end up as a historic moment of humiliation, pending future events.

The backlash against Carney has come from all sides. He may be fortunate that Parliament is not in session and his minority government doesn’t have to face the music until the Fall. No doubt, that was his calculation.

Today the Toronto Star published an open letter signed by Canadians for Digital Sovereignty who describe themselves as “a group of patriotic Canadians and civil society organizations who care deeply about the future of Canada.” The letter expresses the concern that backing off the digital services tax will embolden Trump to press other trade demands, in particular where Big Tech and Hollywood are involved.

Carney might regard some coalition members as the usual suspects in public policy matters affecting digital and cultural sovereignty, but the inclusion of others suggest a broader opposition that ought to disquiet the Prime Minister.

The members of the coalition hail from English speaking Canada. From what I have seen on social media, their French-speaking counterparts in Québec are angered by Carney’s DST climb-down and their displeasure will be expressed.

Here’s the Open Letter:

Open Letter: Canada cannot afford to concede more to foreign tech giants

Dear Prime Minister Carney and Minister Champagne, 

We are a group of patriotic Canadians and civil society organizations who care deeply about the future of Canada. We are disappointed by the government’s decision yesterday to both halt collection of the Digital Services Tax and eventually repeal the Digital Services Tax Act. As a result, on Canada Day, foreign tech giants will enjoy an immediate $2.5 billion windfall and a $7.2 billion tax break over the next 5 years. While we recognize the difficult choices facing the government, we feel that we cannot ‘build Canada strong’ while surrendering ever more of our digital sovereignty and security.

We urge the Government of Canada to:

(i)                  Find ways to use foreign tech giants’ massive untaxed profits to fund homegrown alternatives, despite proposing that Parliament repeal the Digital Services Tax Act 

(ii)                Strengthen Canada’s digital sovereignty in trade negotiations and in undertaking a reset of Canada’s forward digital policy agenda, and

(iii)              Make no further concessions to foreign tech giants, including on legislation passed by Parliament (the Online Streaming Act, Online News Act) or in addressing urgent matters including combatting online harms, regulating artificial intelligence, ensuring the integrity of the information environment (including for health information), protecting privacy, among other measures to rein in foreign tech giants’ negative impacts on our economy and society.

 Foreign tech giants, especially U.S.-based companies, have made hundreds of billions of dollars in Canada in recent decades and yet have not paid their fair share in taxes. Many enjoy tax breaks on digital advertising paid for by Canadians thanks to a loophole in the Income Tax Act. We are one of the largest digital markets in the world, with a highly online population, skilled workers, and innovative companies. Yet in 2023 alone, U.S. tech giants made $20.7 billion in Canada from distributing online content. U.S. tech giants are crushing domestic competition, dominating our markets and imposing a range of externalities on Canadians. They profit from the amplification of online harms, including the spread of false and manipulated information, hurting the mental and physical health of children along with all Canadians. They are eroding the economic basis for the professional news media and feeding the toxification of our increasingly digital public sphere upon which our democracy depends.

The Digital Services Tax is a modest yet much-needed measure that will ensure foreign tech giants are more fairly taxed and held accountable for their enormous power over Canada’s society and economy. We are disturbed to see the alignment of CEOs of Alphabet, Meta, Apple, Amazon and X Corp. with the current U.S. administration’s agenda, which threatens Canada’s political and economic independence.

Rather than repealing the DST, we urge you to consider how foreign tech giants’ massive unfair profits in Canada could be taxed to invest in Canada’s digital sovereignty, building homegrown alternatives to U.S. monopolies. At many times in our history, Canada has invested to build communications infrastructure in the national interest. Canadian companies can help build platforms, networks, and tools that reflect Canadian values, strengthen our cultural and information ecosystems, and nourish our diversity as a country with two official languages and three founding peoples – Indigenous, French, and English – so that Canadians in communities across our far-flung country can better serve their own needs to communicate and connect.

We note that the U.K. did not make concessions to their digital services tax to get a trade deal with the US.

We stand ready to help our government, to inform and rally Canadians to help build our digital sovereignty and a better digital society.

Regards, 

Organizational signatories

ACTRA National
Amanda Todd Legacy Society
Broadbent Institute
Canadian Anti-Monopoly Project 
Canadian Centre for Policy Alternatives
Canadian Centre for Child Protection
Canadian Federation of Nurses Unions
Canadian Medical Association
Canadian Media Guild
Canadians for Tax Fairness
Centre for Media, Technology and Democracy
Children’s Healthcare Canada
Community Radio Fund of Canada
The Dais 
Documentary Organization of Canada
Friends of Canadian Media
Goodbot Society
Inspiring Healthy Futures
Open Media
Pediatric Chairs of Canada
Reset Tech
Unifor National & Local 87-M

Individual signatories
Mike Ananny, former advisor to Canadian Heritage on the future of CBC/Radio-Canada, and Associate Professor of Communication and Journalism, University of Southern California

The Right Honourable Adrienne Clarkson, CC

Linda McQuaig, author and journalist

Taylor Owen, Director of the Centre for Media, Technology and Democracy and Associate Professor at McGill University

John Ralston Saul, CC

Leslie Regan Shade, Professor Emerita, Faculty of Information, University of Toronto

Paul Valée, CEO of Tehama.io 

Dwayne Winseck, Director Global Media and Internet Concentration Project, and Professor School of Journalism and Communication, Carleton University

***

If you would like regular notifications of future posts from MediaPolicy.ca you can follow this site by signing up under the Follow button in the bottom right corner of the home page; 

or sign up for a free subscription to MediaPolicy.ca on Substack;

or follow @howardalaw on X or Howard Law on LinkedIn.

I can be reached by e-mail at howard.law@bell.net.

This blog post is copyrighted by Howard Law, all rights reserved. 2025.