Trade negotiations between Canada and the United States have been at an impasse for months. Instead of trying to bridge that divide, Carney government bureaucrats recently made a decision that threatens to derail negotiations even further.
Last week, the Canadian Radio-television and Telecommunications Commission (CRTC) announced plans to triple the tax that online streaming giants like Netflix and Amazon Prime have to pay to the Canadian government, which then gets distributed into so-called local media funds, from five per cent to 15 per cent of total Canadian revenue.
These funds supposedly exist to help promote Canadian content and culture. When the Online Streaming Act, which is the legislation under which these regulations are implemented, was first passed, everyone recognized this regime for what it was: a means of implementing a streaming tax on big American corporations.
By essentially adding a new streaming tax on online streaming giants, the federal government all but guaranteed that costs for Canadians would go up, as no business takes a new tax imposed by government lying down.
But it’s not just Canadian consumers that recognized this new tax for what it is: south of the border, American politicians immediately saw this new streaming tax as an attack on major U.S. corporations, as streaming providers are predominantly American companies. When the legislation was first passed in 2023, the United States Trade Representative (USTR) under the Biden administration spoke out against the Trudeau government’s measure.
And anger at the Canadian government over the Online Streaming Act continues to be bipartisan, with President Donald Trump’s USTR, Jamieson Greer, pointing to the legislation as a key sticking point in ongoing trade negotiations. Republicans in Congress have even introduced a bill that would call on the USTR to investigate the Online Streaming Act and impose new tariffs on Canada if the legislation were to be found to unfairly target U.S. corporations.
Should that legislation pass, the outcome of such an investigation is likely inevitable, as the Online Streaming Act does in fact uniquely and unfairly target American companies.
With all of these negatives, there was clear pressure on the Carney government, both from consumers and from south of the border, to repeal the Online Streaming Act. Unfortunately, the CRTC decided to make matters far worse by announcing plans to triple the streaming tax.
What will a 15 per cent streaming tax mean for you?
First of all, it will mean higher costs. There’s zero chance corporations like Netflix and Amazon will give the federal government 15 per cent of their total Canadian revenue without increasing prices for consumers. Unfortunately, this could even encourage some streaming providers to leave Canada altogether, coming to the same conclusion that Hulu did that the Canadian marketplace simply isn’t worth the cost.
It also means a trade agreement with the U.S. is far less likely.
This legislation was already one of the top grievances the Trump administration was citing in ongoing negotiations to new the CUSMA, which is up for possible renewal later this year. There is less than zero chance that the Trump administration won’t notice the CRTC’s decision.
The CUSMA is literally the only reason why Canada has thus far avoided a recession in the wake of the Trump administration’s tariff agenda, as 85 per cent of Canada’s trade with the U.S. is exempt from tariffs under the agreement. Take that away, and Canada will surely fall into a recession.
By making the impact of the Online Streaming Act even more severe right before official negotiations on the CUSMA were set to get underway, the Carney government is sabotaging negotiations with the U.S. before they even begin. Greer has consistently said that advance negotiations between the U.S. and Mexico are already going much better than negotiations between Canada and the U.S. This will make things worse, not better.
It’s time for Prime Minister Mark Carney to take a stand. Carney hasn’t been afraid to scrap other Trudeau era policies that were wrongheaded and displeased the Trump administration, and the Online Streaming Act should be added to the list. Repealing it would both save consumers money and help revive trade negotiations with the U.S., which already appear to be on life support.
Jay Goldberg is the Canadian Affairs Manager at the Consumer Choice Center. He previously served as the Ontario Director at the Canadian Taxpayers Federation and a policy fellow at the Munk School of Public Policy and Global Affairs. Jay holds a Ph.D. in Political Science from the University of Toronto.
