Ottawa avoided a trade setback. But Trump could come for supply management next
Dreams do come true, as evidenced by U.S. President Donald Trump’s wish for Canada’s tax on U.S. tech companies to disappear being fulfilled in a matter of days. The digital services tax (DST), which was set to be imposed by Ottawa, was scrapped just two days after Trump expressed his desire for it to be eliminated.
The swift action taken by Canadian negotiators to abolish the DST came as a surprise to many, especially considering the strong opposition it faced from the U.S. government and tech giants like Meta and Amazon. The move was seen as a strategic play to keep trade talks with the U.S. moving forward, but it may have unintended consequences when it comes to other contentious issues, such as supply management.
Trump has long criticized Canada’s supply-managed dairy system, citing high tariff rates on U.S. dairy exports to Canada as a major point of contention. While the recently passed Bill C-202 prohibits supply management from being used as a bargaining chip in trade negotiations, it may limit Canada’s flexibility in dealing with Trump’s demands related to the dairy industry.
The U.S. administration celebrated the elimination of the DST as a victory, with White House officials praising Canada for removing the tax and paving the way for renewed trade talks. However, there are concerns that Trump may now focus his attention on pressuring Canada to make concessions on supply management, which could create significant challenges for the Carney government.
The passage of Bill C-202, which was supported by the Bloc Québécois and has implications for the Liberals’ political fortunes, underscores the complexity of the trade negotiations between Canada and the U.S. With the July 21 deadline for a new trade deal looming, there is uncertainty about how Trump will respond to Canada’s concessions and whether further compromises will be required to secure a comprehensive agreement.
As the negotiations continue, it remains to be seen how Canada will navigate the delicate balance between meeting U.S. demands and protecting its own interests, particularly in the contentious area of supply management. The coming weeks will be crucial in determining the future of Canada-U.S. trade relations and the extent to which Trump’s wishes will shape the outcome of the negotiations.
