What the Canada-U.S. Trade Deal Could Mean for Canada's Digital Laws
U.S. Trade Representative Jamieson Greer said the Canada-U.S. trade deal would include "comprehensive market access for all American goods, economic security commitments, digital trade alignment, and many important provisions," in a social-media post about a trade deal with Prime Minister Mark Carney's government. Canada-U.S. Trade Minister Dominic LeBlanc and Greer spoke to reporters in Washington, D.C., on a Wednesday. The Globe and Mail
Tech experts expressed concern that the impending Canada-U.S. trade deal could compromise Canada's sovereignty over its own digital policies, including a proposed social-media ban on those younger than 16. A recently introduced safe social-media bill in Canada would impose a ban on those under 16 using social-media platforms such as Elon Musk's X.
Matt Hatfield, executive director of OpenMedia, expressed concern that a trade deal could lead to the scrapping of both the Online Streaming Act and the Online News Act and compromise Canada's freedom to legislate on digital policies. Hatfield said he was concerned the trade agreement may entrench clauses that further compromise Canada's ability to set meaningful independent digital policy or regulate U.S. firms' operations in Canada.
Jim Balsillie, former co-chief executive officer of BlackBerry Ltd. who chairs the Council of Canadian Innovators, is among the experts raising alarms about the digital trade alignment Greer referenced.
The Online Streaming Act, which became law in Canada in 2023, forces platforms such as Netflix and Amazon Prime to contribute financially to Canadian cultural industries. The Online News Act, passed in Canada in 2023, led Meta to bar news for Canadian users on its platform and has been a source of irritation in Washington. Only Google is currently captured by the Online News Act, which makes it contribute financially to Canadian news organizations in return for using their content.
The broader context here is that Canada has already made significant concessions on digital policy in the course of trade negotiations with the United States. Canada agreed with the U.S. to drop the digital services tax, a measure that benefits U.S. tech giants such as Meta Platforms Inc. and Netflix Inc. Canada rescinded its digital services tax to advance broader trade negotiations with the United States. The digital services tax was announced in 2020 to address the fact that many large technology companies operating in Canada may not otherwise pay tax on their revenues. Department of Finance Canada
Expert Bednar told CBC's As It Happens that companies in the Canada-U.S. trade talks have asked for lax privacy laws and to prevent Canadians from mandating data residency. Data residency refers to requirements that Canadians' personal data be stored on servers physically located in Canada, which gives Canadian law some authority over how that data is handled. CBC
Conservative leader Pierre Poilievre and other Conservatives urged Prime Minister Mark Carney in a letter to stop making concessions in pursuit of a tariff-free deal with the U.S., citing Canadian sovereignty. The Globe and Mail
Canada offered the Trump administration a package of trade proposals in hopes of preventing 50 percent U.S. tariffs on Canadian goods. The New York Times
Four sources told Radio-Canada that the Trump administration is demanding what amounts to an "entry fee" before it will engage in trade discussions with Canada. Radio-Canada
Canada has largely mirrored U.S. trade policy by tightening restrictions on Chinese goods, including imposing higher tariffs on them. CSIS
In his State of the Union tariff defence, Trump said some Canada-U.S. irritants touch on Canada's digital sovereignty while others relate to Quebec's linguistic identity. The Globe and Mail
The Canada-EU digital trade agreement will establish a comprehensive, forward-looking framework for digital trade that enhances legal certainty for businesses. Global Affairs Canada
The tension between trade concessions and domestic regulatory autonomy is not new in Canadian digital policy. The rescission of the digital services tax last year established that Ottawa was willing to unwind revenue measures to keep broader trade talks alive. What the "digital trade alignment" language from Greer introduces is the possibility that legislative instruments already enacted, the Online Streaming Act and the Online News Act among them, could be treated as trade irritants subject to negotiation rather than settled domestic law.
For practitioners tracking the file, the key question is whether alignment provisions in a final text would constrain future Canadian legislative action on data residency, privacy standards and platform regulation. Think of it this way: a trade deal normally settles tariffs and quotas, but "digital trade alignment" could reach into the substance of Canadian law itself, telling Parliament what it can and cannot regulate online. The ask from companies in the talks for lax privacy laws and restrictions on data residency mandates signals that the scope of digital trade provisions could extend well beyond tariff lines into the substance of Canadian digital governance.
The Canada-EU digital trade agreement provides a counterpoint, establishing a framework oriented toward legal certainty for businesses without requiring the rollback of existing domestic cultural or news legislation. The divergence between that approach and the direction the U.S. is pushing creates a strategic problem for Ottawa: aligning with U.S. digital trade expectations risks constraining the policy toolkit available to Parliament, while the EU framework shows that digital trade agreements can be structured without demanding domestic legislative rollbacks.
The stakes are concrete. If the final Canada-U.S. text entrenches limits on Canada's ability to regulate U.S. firms' operations, the safe social-media bill targeting under-16 use of platforms such as X could face legal challenge under trade provisions. The Online Streaming Act's contribution requirements for Netflix and Amazon Prime, and the Online News Act's financial contribution regime, currently applicable to Google, could be subject to renegotiation or rollback. The distinction between a trade deal that facilitates digital commerce and one that constrains domestic legislative sovereignty is the line advocates are asking the government to hold.
