This spring’s federal election was fought largely over who the electorate thought would be in the best position to stand up to U.S. president Donald Trump.
In the end, voters appeared to have the most confidence in prime minister Mark Carney.
It must have come as a bit of surprise to many, then, when the government conceded so quickly to Trump’s threat to cancel trade talks with Canada if it didn’t abandon its digital services tax.
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The three per cent tax has been in place since last year, and the first payments were due June 30. It would have applied to the revenue these tech giants earn in Canada.
Ottawa has long held that these companies weren’t always paying tax on services provided in Canada because of their online nature and the fact that many of them operate outside of the country.
Companies such as Google and Meta have strenuously objected to the tax, as has Trump.
Most Canadians know little about this file, but if they have thought about it all, likely concluded that it wasn’t too much to ask for large multinational tech companies to pay their fair share of taxes for services provided in this country.
Canada isn’t alone on this. Europe and other countries have also been attempting similar initiatives, and talks have been ongoing to develop a standardized approach to taxing this type of revenue.
The government’s decision to quickly give in to American pressure certainly bruised our national pride, particularly when White House spokespeople got up in front of the camera to talk about how Canada “caved” to U.S. demands.
Carney has said the tax was always going to part of the trade negotiations with the United States, so little harm was done by getting it off the table now.
Consequently, while the incident can be perceived as yet another slap in the face from the U.S., it has little real-time repercussions for most of us, particularly farmers.
However, there is another bee in Trump’s trade bonnet that could ultimately take the same trajectory as the digital services tax, and this one would hit far closer to home for many farmers.
While Trump had been raging about Canada’s digital services tax, he was also yelling about supply management, often with less-than-scrupulous attention to the facts.
Now that he has scored a victory on the digital services tax file, what’s stopping him from threatening to also put the brakes on Canada-U.S. trade talks unless we “cave” on supply management?
He hadn’t done this as of the Western Producer’s July 14 press deadline, but it remains a very real possibility.
Rescinding the digital services tax was one thing; having to decide what to do about supply management if it was tied to trade talks with the U.S. would be quite another.
The dairy producers lobby in this country is vocal, particularly in the vote-rich parts of Canada. It’s why all federal political parties have supported it.
To complicate matters, Parliament recently passed legislation that prevents trade negotiators from making further supply management concessions.
However, many other export-oriented farmers would shed few tears if Canada abandoned what they see as a trade irritant.
If the U.S. president decides to double down on his trade threats and target supply management next, Canada will truly find itself between the proverbial rock and a hard place.
Karen Briere, Bruce Dyck, Robin Booker, Paul Yanko and Laura Rance collaborate in the writing of Western Producer editorials.
