Tag: CUSMA

The US-Canada Tariff War and the Creative Industries: More Woolly Thinking

A wicker basket filled with colorful skeins of yarn, featuring shades of blue, green, red, and brown, set against a grassy background.

Image: Pixabay

As the tit for tat imposition of tariffs between Canada and the US escalates, people in the creative industries on both sides of the border must be wondering where this will end. The latest to get tangled up in this web are knitters. Yes, knitters—of woollen sweaters, baby booties, nose warmers etc. A couple of weeks ago I wrote about the impact on Canadian artists, since various categories of original art– paintings, drawings, collages, sculptures and statuary, original prints and lithographs—are included in the “Section 338” fifty percent US tariffs imposed in retaliation for Canada’s retaliation, particularly the provincial bans on the selling of US liquor and wine. But also included in the long list of Canadian products hit by US import tariffs is the following; “Wool, excluding unimproved, finer than 46s, greasy, shorn, not carded or combed”.[i]

Well, you say, how does that affect Canadian knitters? Sheep farmers, yes, but knitters? Well, according to this Canadian Press story, it has a big impact because Canada has hardly any facilities left to transform greasy wool into yarn. As we know once upon a time, in the horse and buggy era, all sorts of things got done locally; slaughtering cattle, cleaning wool, churning butter, milling wood. Then, with industrialization, international trade and the era of specialization and transportation, local production tapered off and supply chains sprang up linked to locations where economies of scale made production competitive. Rather than processing wool close by, Canadian producers sent their raw wool to factories in the US to be processed. It was more cost effective to do so because these factories were large and processed a lot of wool from a wide area. With an integrated North American market, the cost of transportation was minimal compared to the efficiency savings. There were no tariff impediments to crossing the border. Once processed, some of the processed Canadian wool came back to be feedstock for knitters in Canada (some of whom then produced products for the US market). It is a classic example of how international trade is supposed to work. But with the imposition of US tariffs on raw wool, Canada’s wool industry is now realizing the need to be more self sufficient. In the interim, Canadian raw wool is being sent to Europe or China for processing. Who wins? China. Who loses? US mills that formerly were processing Canadian wool and then exporting it back to Canada. And this is the tariff that is supposed to be punishing Canada! Talk about woolly thinking.

When governments start untangling supply chains, combing through protectionist options and ramming through changes, things begin to unravel. Having had the wool pulled over their eyes by the seductive siren of protectionism, they should have every reason to feel sheepish when they see the result of their actions. OK, enough puns. This is serious business. Not only is knitting a creative industry, sometimes on an industrial scale but also at an artisanal level, it is also related to copyright because of the intellectual property behind the patterns. In fact, I wrote an entire blog post on knitting patterns and copyright theft a few years ago.

The Trump administration has based its trade policy on forcing repatriation of production back to the US through the imposition of tariffs on imports. I don’t need to repeat the judgment of just about every economist in the world, except for Peter Navarro, who argue this is self defeating. The cost of import tariffs will be borne by US consumers, as is becoming increasingly evident. The disruption of efficient supply chains will hurt US manufacturing and US workers. This is an argument put forward by the auto industry where North American supply chains have become increasingly integrated as a result of NAFTA and its successor, the USMCA/CUSMA. But even in an industry like wool processing, the impact of impeding mutually beneficial supply chains is revealing.

The only result of the US policy will be to force Canada to become more self reliant and to redevelop its own wool processing industry. This will cause job losses in the US and probably increase the price of processed wool in Canada. It may result in the effective transfer of some jobs from the US to the new (less efficient) processing plants in Canada, but Canada will have gained some jobs and at least Canadian knitters will have a reliable supply of raw product, not subject to the whims of whoever happens to be in the White House. This is the sovereignty or security argument for protecting home-grown industries in contrast to the comparative advantage/greater efficiency rationale for open markets. The former seems more important these days as a result of the US underming the global trading system through its unilateral actions.

In a sense, the example of the negative impact on the US wool processing industry from ill-conceived tariffs on Canadian raw wool is very similar to the position that Canada created when it announced retaliatory tariffs on Canadian imports of US seafood. The immediate effect would have been to put out of work a lot of people in the New Brunswick riding of US-Canada Trade Minister Dominic Leblanc. New Brunswick and Maine have long had a close trading relationship. Maine lobsters are harvested earlier because they mature faster, having grown in slightly warmer waters. When lobsters are ready to be processed, there is a glut of them. Processing capacity is stretched. The solution devised over many years is to ship many Maine lobsters to New Brunswick for processing because there is excess processing capacity at that time of year. The processed US lobster then comes back to US markets. Everybody wins. The Canadian government, in its zeal to send a message to US exporters that tariffs are a two-way street–and that consequently they should start putting pressure on the Trump administration to repeal tariffs on Canada–almost shot itself in the foot. The Canadian tariff, devised by bureaucrats behind a desk in Ottawa who had apparently not bothered to consult people on the front lines of the Atlantic seafood industry, was rescinded a day after it was announced. Both sides need to lower the temperature as people, including artists, knitters, crocheters, lobster processors and many others, are getting hurt.

There is another example of backtracking on retaliatory tariffs that I cannot help but mention. After threatening Canada with Section 338 tariff punishment, the Trump administration quietly rescinded the additional tariff it imposed on imports of Canadian toilet paper. Who says Canada has nothing that the US needs! If Canada is looking at ways to strike back, putting an embargo on the export of this crucial commodity would rub a lot of US consumers the wrong way. But would it wipe away the damage?

The first shot in this trade war was fired from Washington. So far, the Trump administration has managed to hit just about every US consumer, US workers in car assembly and parts plants in the US that rely on an integrated North American industry, and now apparently workers in US mills processing raw wool. Of course, it has also hurt Canadian workers and producers, which was the intention. The inevitable Canadian reaction has also inflicted its share of economic pain on Canadian consumers, and US workers. Under current leadership in the US, it is hard to be optimistic that this is going to change anytime soon. In the meantime, “frogging” (look it up) an industry that has been knitted together for decades is yet another example of the self-defeating economic policies coming out of the current US administration.

© Hugh Stephens, 2026. All Rights Reserved.

[i] For clarification, the term “excluding unimproved” means that the tariff line includes wool from “improved”, i.e. bred sheep (like Merino or crossbreeds) whose wool is used for textiles. “Unimproved” in terms of tariff definition means wool that comes from wild or native sheep breeds that have very coarse, rough, and uneven coats. The increased tariff targets wool from live sheep that has not been processed, i.e. washed, carded or combed.

Slapping a Fifty Percent US Tariff on Original Canadian Art—and Renaming Bodies of Water: That’ll Teach Those “Nasty Canadians” a Lesson

A humorous and surreal image depicting a group of geese with cartoonish hairstyles resembling Donald Trump's, standing on a grassy area near a body of water, some holding guns.

Image: Truth Social

Nova Scotia mixed media artist Chris Warburton Hulme, (whose motto is “Empowering Women Through Art”), produces prints, bookmarks, cards, stickers, notebooks etc. based on her original art. According to this CBC report, Warburton Hulme will no longer be selling to her US customers out of principle because she believes that works of creative expression should not be at the centre of a tariff war. Even if she didn’t have such scruples, her US market probably dried up in any case, as all her work just got 50 percent more expensive in the US as a result of the Trump administration’s imposition of retaliatory tariffs on a range of Canadian products. In the case of art, unless they are more than one hundred years old, the new tariff applies to paintings, drawings, collages, sculptures and statuary, original prints and lithographs and, for good measure, anything (art or otherwise) made from tortoise shell, whalebone, horns, antlers, hooves, nails, claws and beaks. That will stem the flood of deer hoof rattles flooding in from Canada! The tariff being applied is based on a legal measure that has never before been used, Section 338 of the US Tariff Act of 1930. That Act established what are commonly known as the infamous Smoot-Hawley tariffs that resulted in deepening the Depression and causing a severe rupture in international trade before the Second World War.

This US retaliation is in response to Canada’s retaliatory actions taken against the original imposition of US tariffs on a range of Canadian products entitled to tariff-free access under the trilateral trade pact, the USMCA (referred to as the CUSMA in Canada). The US overrode its market access commitments in the USMCA by invoking the pretext of “national security”, a self-judging loophole that is part of the agreement. As a result, the US imposed tariffs of up to 50% on Canadian steel, aluminum, and copper, 25% on cars and wood products including such key national security items as upholstered furniture, vanities and kitchen cabinets, and 10 percent on lumber on top of existing duties, bringing the total tariff on Canadian lumber to the range of 30 percent. Lumber exports to the US from Russia pay less duty. Canada had the temerity to retaliate against this treatment, leading to the present situation. The US position is that not only is it entitled to erect import barriers into its market, at the same time it is equally entitled to demand duty free access to other markets. If you don’t agree to this, the US will inflict pain on you targeting, among others, Canadian print makers and antler and bone carvers. Watch out! Worse is to come.

If that doesn’t bring those “nasty Canadians” to heel, Donald Trump has another ace up his sleeve. Renaming. For starters, he signed an executive order renaming Lake Ontario, the name by which it has been known for approximately 400 years, to Lake America. Where is Lake America? You’ll have to ask the President, but in case you are in any doubt he posted this bizarre video showing him replacing a Lake Ontario sign with one saying Lake America and then doing some sort of victory dance. It is truly distressing—and frankly sad—to see the President of the United States, enabled by the sycophantic clique surrounding him, behaving like a spoiled adolescent. Sorry, that’s unfair to spoiled adolescents who could be forgiven for not knowing any better. This puerile behaviour could be ignored if it wasn’t so dangerous and harmful for the longstanding economic and political relationship between the two countries that share the largest part of the North American landmass.

After the US began enforcing the Section 338 tariffs following the last-minute implosion of the trade talks that were taking place because of the 338 tariff threat, Canada announced yet another retaliation list. One wonders about its efficacy, although it is good domestic politics to be seen to be standing up to threats. While Canada can impose some selective pain on US exporters, it cannot really hurt the US economy. Trump’s widespread tariffs on imports, not only from Canada but from just about everywhere, are taking care of that. While designed to put some pressure on US exporters, the Canadian tariffs are also apparently intended to help Canadian producers–who now have their access to the US market impeded–by providing them with protection against directly competing US imports. Original art has in fact not been targeted by the Canadian tariffs; putting a reciprocal tariff on US deer hooves, lithographs or sculptures probably wouldn’t make much difference to Canadian artists anyway. One result of the Canadian countermeasures will be to increase the price of products imported from the US, so Canadian consumers will be the ones taking a hit. Mind you, the mood of consumers is already very much behind purchasing locally made products, but generally the retail end-user is unable to identify intermediate inputs. It is overly simplistic to slap a “Made in Canada” label on a product when in fact, there are relatively few products made exclusively in Canada. Perhaps Chris Warburton Hulme’s products qualify.

One result of the Canadian counter-action will inevitably be further US retaliation. Most Canadian provinces have in effect banned the import of US liquor and wine, not by imposing an import ban but by simply not placing orders for the product, and by not retailing it. Apparently, the US is mulling banning some Canadian products as a countermeasure. Maybe Canadian maple syrup will have to find new export markets.

Donald Trump could also up the ante on his renaming offensive, passing more executive orders to eliminate all those annoying references to Canada. Let’s get rid of “Canadian bacon”. (As a footnote to my US readers, no-one calls it Canadian bacon in Canada. It is simply just “back bacon”). Let’s rename the Canada goose. Trump seems to have a hate on for this noisy and annoying bird that tends to foul golf courses and playgrounds, judging by another inane post from the White House. Goose poo flown in from Canada. Almost as bad as wildfire smoke. Some have suggested renaming the Canada goose as the Donald Duck. Maybe the Daffy Duck would be more appropriate. Or, how about “Lame Duck”.

When will this madness end, and artists like Chris Warburton Hulme can get back to creating art without getting caught in a political crossfire? Probably about the time that Lake America fades into history. Lake America is impossible to find on Google maps in Canada, although its name recognition surged briefly when some official Canadian websites found, to their embarrassment, that the underlying settings for Google maps in Canada were set to a US API (Application Programming Interface), making Lake America the default setting. That was hastily changed. To stir the embers, Canada’s own resident clown, Ontario Premier Doug Ford (who has an unfortunate and canny ability to get under Trump’s skin), unveiled a large sign proclaiming, bilingually, “Lake Ontario: Now and Always”, as if anyone really needed to do this. Don’t take the bait. About the time the moniker Lake America disappears, the true name of the Gulf of Mexico will also make a comeback, although this US website suggests that Trump is having a tough time making Gulf of America stick. Perhaps the lyrics of Johnny Horton’s song (“We fired once more and they began to runnin’, On down the Mississippi to the Gulf of Mexico”) will not need to be rewritten after all.

The most recent infantile outburst is this post on Truth Social showing Trump (who probably can’t even skate—those darn bone spurs again) knocking down Carney (who played on the Harvard hockey squad, admittedly as back up goalie) in a supposed ice-rink confrontation. Doesn’t he have better things to do? The sad spectacle of the most senior elected official, and many non-elected cabinet-level officials of the United States, making complete fools of themselves through childish, meaningless social media posts and comments makes one wonder who is really in charge. Have the inmates now finally taken over the asylum?

© Hugh Stephens 2026. All Rights Reserved.

How Did Content Discoverability Become a Third-Rail Issue for Canada-US Trade Talks?

A person holding two circular objects resembling binoculars, with red and white Canadian flags displayed on each lens.
Image: Shutterstock.com

US Trade Representative Jamieson Greer declared in his interview with the CBC on August 26 that the issue of discoverability of Canadian content, especially French language content, was not a dealbreaker. It had only been “highlighted” by the US as an issue. “There is no way we would let a good deal go by for something like this”, he is reported to have said. Canada-US Trade Minister Dominic Leblanc immediately jumped on Greer’s comments saying in a social media post that he welcomed the fact the US is withdrawing its positions on the French language and Canadian culture. On this basis, said Leblanc, there might still be the possibility of reaching a trade agreement after all. Talk about putting words into someone else’s mouth! Greer said nothing of the sort, although if both sides want to get back to the table at the earliest opportunity (and it is not clear that they do), then this would help provide a pretext.

While Greer said the US only “highlighted” the discoverability issue, this was a clear admission it had been put forward as an irritant the US wants resolved. You don’t raise an issue at the negotiating table only to say it wasn’t really important after all. Perhaps it was put there to be traded off for something else, or to keep Canadian negotiators on the defensive? Perhaps Greer is indicating that USTR only kept discoverability on the list to mollify the US streaming industry? But whatever the motivation, apparently this issue kept showing up in the list of US demands right up to the time the Canadian negotiators walked away.  It seems that the streamers, having swallowed the Carney government’s announced intention to reverse the CRTC’s decision requiring them to “contribute” 15 percent of annual revenues to Canadian production, smacked their lips, burped and said “More”. This may have been a strategic mistake as it allowed the Carney government to wrap itself in the flag and “stand up” for Canadian culture.

If discoverability wasn’t an issue, why put it forward? By the same logic, if French language labelling (Quebec’s Bill 96) wasn’t an issue, why was it up for negotiation? While French-language labelling requirements weren’t included in this year’s list of trade barriers published annually by USTR, Bill 96 was included in 2025. This year, Quebec Bill 109 which addresses the French language discoverability requirements was explicitly listed under “Service Barriers” in the Canada section of the National Trade Estimates. (As an aside, Bill 109 may intrude on the federal broadcasting power, well established in law for decades, but that is another issue for another day). Either these issues were on the list of “trade irritants” the US wanted resolved, or they were not. It is pretty clear that they were. And it is also clear that USTR has not “withdrawn its position”.

Putting discoverability of French language and other Canadian content on the list of US negotiating objectives makes this a third rail issue because of how it touches on sovereignty and the right to cultural expression. The Online Streaming Act, under which both discoverability and contributions to Canadian content fall, is consistently listed by the US as a trade issue. Until now, the mandatory payments (aka “contributions”) were the key sticking point but, as Michael Geist has commented, recent developments seem to have shifted the focus of US discontent away from payment for production of Canadian content to the promotion of such content. I am not convinced the payment issue has entirely gone away, however. The government has yet to issue a directive to the CRTC instructing the Commission how to modify its implementation of the Online Streaming Act, other than stating in press reports and a court filing that it will not be pursuing statutory contributions of 15%, or the earlier announced level of 5%, based on annual revenues. Culture and Identity Minister Miller has said publicly that the streamers will still be expected to “reinvest” in the production of Canadian content. Meanwhile the Canadian cultural community is urging the government to rollback its previously announced reversal of the CRTC mandated contributions. Canada may still hold some cards.

With regard to discoverability, what is its purpose, how will it work, and why is it so important both to Canada and to the US industry? Discoverability relates to promoting an awareness of certain types of content, in this case Canadian content or French language content, so that consumers can decide if they want to give certain content a try. The CRTC definition is as follows;

“…content and services are discoverable if they are made available and visible to audiences, including when an audience member is not actively seeking such content and services.”

Discoverability applies to both audio and video streaming service, for example, Spotify and Netflix. The contribution framework announced by the CRTC, now suspended, applied the initial 5% “down payment” contributions to both music and video streamers although the second tranche that raised the contribution to 15% applied only to the video streamers. Perhaps the CRTC would have dropped the second shoe on the audio streamers too, but they didn’t get around to it before the government intervened to roll back the mandated contributions on the AV streaming industry.

It is true that video streamers like Netflix already have a button to access Canadian content, so if a consumer really wants to watch a Canadian show, they can go there first. But most consumers, including me, don’t want to watch shows just because they are in some way Canadian. We want to watch shows that interest us. If a show that interests me happens to be Canadian, that might pique my interest, but I am unlikely to search it out. Therefore the requirement is that Canadian content be presented as part of the proposed options within genres that viewers prefer, i.e. no “Canadian silos”. There is no prescription as to how this will be done. It could be along the lines of the “Produced in Canada” labels that Loblaws has just been pressured into putting back on Canadian produced food, it could be an animated beaver waving at the viewer from the corner of the frame, (me, me, watch me) or it could be something more subtle, like prominence of display. We will have to wait and see. Discoverability has come into play because the old world of content quotas is passé. Most consumers today aren’t passive receivers of content that is served up to them; they are actively engaged in deciding what they consume by choosing from the menu. There is choice. What discoverability seeks to do is inform, or some might say, influence that choice.

If discoverability is only about surfacing Canadian content rather than requiring production or airing of Canadian content, then why are the streamers so opposed?  One reason might be that they don’t have that much Canadian content on their platforms and if they are required to constantly highlight new Canadian productions, this might require more investment in acquiring or producing Canadian content, especially if there are restrictive definitions of what qualifies as Canadian under CRTC rules. More on this point below. The second objection is that imposing discoverability will screw up their algorithms (and cost them money). I am not a technical guy but frankly I don’t buy that. If an algorithm can be tweaked to serve up differing content based on one’s user profile, I don’t understand why it can’t be programmed to make Canadian content discoverable. I do understand why the streamers–who operate in many countries–don’t want to do this. But if they have to subtitle in Italian in Italy, perhaps in Canada they may have to tweak the algorithm and the operating system for francophone consumers, both in terms of discoverability and user interface.

Other than having regulations that require a Canadian production to be discoverable, how else could Canadian content stand out? Simple. By being good. The sad result of decades of subsidization of Canada’s TV and film industry is that it has produced a lot of second-rate content that meets Cancon criteria, but which almost no-one wants to watch. You can fill the airwaves with Canadian content, but you still can’t compel audiences to watch it. Of course there are exceptions, but as Peter Grant pointed out in a guest column on this blog a couple of weeks ago, it is an open question as to whether Canada can produce a global hit. Those engaged in the industry—writers, directors, filmmakers—may argue that the structure of the industry (lack of financing) and English Canada’s cultural domination by its southern neighbour means the cards are stacked against producing a good quality, commercially viable Canadian product. Therefore, it is argued, government needs to step in to level the playing field (or tilt it). This has happened for many years, yet the reality is that more is invested in production in Canada (as opposed to Canadian production) by US producers than by all sources of Canadian funding combined, as this study documents. Will discoverability change any of this? Maybe yes, maybe no. Might be worth a try, and in an age where content quotas don’t work, there is not much alternative.

On the issue of streamer contributions, I noted in his CBC press interview that Greer said the Online Streaming Act (OSA) requires (at least until further notice) that US streamers “fund their competitors”. The US regards this as unfair. It is also a misinterpretation and mischaracterization. The main competitors of the big US streamers in Canada are other US streamers. There are Canadian streaming services against which they compete to some extent, like Crave or CBC Gem, but Crave is a “frenemy” because it relies on purchased US content for much of its core programming, and Gem is not going to put any US streamer out of business. The perception that the streamers are required to fund their competition comes from the way their contribution moneys are used.

Under the OSA, as interpreted by the CRTC, the funds contributed by the streamers (and Canadian broadcasters) are allocated in a variety of ways, but none of them are fully controlled by the contributors. There are all sorts of conditions and handcuffs. Among these is a requirement that large online streaming services will, “be required to invest in production partnerships with Canadians that hold the majority of the copyright in the Canadian programming”. In other words, the streamers are limited in their ability to invest in and produce their own Canadian productions to meet their spending obligations. The copyright on the Canadian productions the streamers finance must be held by a Canadian and if the streamers want to exploit that production, they will need to acquire the rights through licensing. They might not be able to do so. For example, they might be outbid by a rival streaming service. This is what I think leads to the argument that they are being forced to fund the competition. If they could control their own productions while meeting Canadian spending guidelines, no-one could argue they were being forced to fund their competitors. I have no idea if lifting the copyright restriction would satisfy the streamers (after all, any business wants “more” and if they can enlist the services of their government to strongarm the other side, why not try?), but it is clear the current system is not working well and furthermore is an obstacle to increased production of Canadian content by the US streamers.

The Cancon system, which is very complex, is not designed to accommodate such a “radical” idea, but maybe as we try to find a way forward to ensure that Canada can promote its content, perhaps we can also find ways to ensure the streamers are incentivized to produce some of that content, as I have written about most recently here and here. This might also result in the content produced being something that Canadians and others will want to watch. Once they have discovered it, that is.

© Hugh Stephens, 2026.  All Rights Reserved.

This post has been updated to provide more detail on the nature of discoverability requirements as outlined by the CRTC.

The Collapse of Canada-US Trade Talks: Respite for Now

A graphic representation combining the flags of the United States and Canada, featuring the American flag with stars and stripes on the left and a red maple leaf on a white background on the right.

Image: Wikimedia Commons (Flanker)

As the Canada-US trade talks went down to the wire last week, working against the artificial deadline set by Donald Trump (with a three-day extension in order to finalize the “deal” he announced on social media, a deal that was about as final as the numerous deals he has announced with Iran over the Strait of Hormuz), I like many Canadians had a foreboding sense of trepidation. Was I worried that the two sides would not come to agreement? No, I was concerned that they would, and that the price of reaching that deal would involve unacceptable concessions by Canada.

Not only that, but the deal would also be about as solid as ice cream in a hot sun. The US would require Canada to change or repeal legislation while it would simply sign an executive agreement that could be rescinded at any time. And that is precisely what would happen next. Mark Carney referred to US commitments being written “in pencil”. One of the supposed US concessions as a result of this deal was agreeing to begin formal negotiations on USMCA/CUSMA renewal. Therefore, Canada’s last and best offer in the interim trade negotiation–that were a necessary attempt to avoid additional 50 percent retaliatory tariffs on a range of Canadian goods as well as to obtain a roll back of sectoral tariffs imposed by the US in violation of CUSMA on steel, aluminum, autos, and wood and wood products–would have become the starting point for US demands for “more” when the formal negotiations got underway. Having seen how little the US was prepared to concede in terms of existing measures, but more precisely how much they wanted for the minimal concessions offered, was surely a wake-up call for the Carney government.

Carney’s last-minute decision to walk away was clearly the right political move from a Canadian perspective, especially with several by-elections coming up in a matter of weeks. Opposition Leader Pierre Polievre’s prepared notes accusing Carney of selling out were quickly chucked aside while Poilievre scrambled to climb aboard the Team Canada bandwagon. Carney’s “elbows up” mantra that got him unexpectedly elected last year was starting to wear a bit thin after unilateral concessions to the US like the eleventh-hour abandonment of the long-planned Digital Sales Tax on large online platforms, a concession that achieved nothing. That said, it is easy to talk tough, but not so easy to accept the responsibility for the economic punishment that may result. Any responsible leader owes it to their constituents and businesses to try to resolve trade issues without resorting to confrontation and retaliation. Canada gave it a good shot this time around, but in the end the price to be paid was just too high. In part, we have Commerce Secretary Howard Lutnick to thank for that.

Lutnick, one of Trump’s billionaire appointments, along with presidential advisor Peter Navarro, is a firm believer in tariffs and in using tariffs to change established trading patterns. Inconvenient trade agreements that constrain this behaviour (such as the USMCA/CUSMA) are to be bypassed or ignored. Lutnick has a particular bee in his bonnet about the Canadian automotive industry, which he essentially wants to drive out of business. There is no question that auto assembly in Canada is dependent on imports of parts from the US and the export of assembled vehicles to US consumers. But the Canadian industry was not established to export to the US; it evolved that way on the basis of a bargain. It has been around for well over a century and was originally established to serve the Canadian market, protected by high tariffs from US imports. Over the years, US companies purchased the Canadian manufacturers, and the industry became more integrated, culminating in the 1965 Auto Pact. That agreement was rolled into the first Canada-US Free Trade Agreement, which morphed into NAFTA and eventually CUSMA. The essence of the deal was that for every vehicle imported duty free into Canada, the automakers had to build one vehicle in Canada. That vehicle might be sold into the Canadian market but could also be sent south to the US, duty free. It was an arrangement that worked well for both sides and has strengthened the North American industry, which needs all the help it can get in the face of Asian and European imports. But Lutnick and Trump don’t understand and don’t like this arrangement. “We don’t want cars made in Canada”, Trump is reported to have said. As the interim Section 338 (referring to Section 338 of the Tariff Act of 1930, obscure legislation resorted to by USTR to impose retaliatory tariffs on Canada) negotiations came down to the wire last week with discussions centering on a reduction in the 25 percent auto tariffs imposed by the Trump administration on Canadian assembled vehicles (these are already a violation of CUSMA terms), Lutnick and Navarro reportedly intervened to minimize the value to Canada of the tariff reduction by excluding medium and heavy trucks from the “concessions”. This was a move aimed specifically at hampering truck production in Canada, one of the few sectors where North American vehicles dominate in both the US and Canadian markets. Lutnick’s carve-out was enough to help tip the scales, forcing the Canadian side to walk away. Thank you, Howard. You inadvertently did Canada a service.

Had Lutnick not introduced this deal-breaker, Canada might have swallowed the poison. Ontario Premier Doug Ford was a key factor too. If the deal was not sufficiently good for the Canadian auto industry, he would have refused to put US booze back on the shelves of the LCBO, (the Liquor Control Board of Ontario), reportedly the single largest global importer of liquor and wine (although this is contested—Costco might be bigger!). Mind you, there were a couple of other deal-breakers on the table as well, which shows either how greedy the US negotiators were, or how little they understand Canadian realities. Surely anyone who haa studied a modicum of Canadian history would know that attacking bilingual labelling in Quebec and support for French language music through discoverability and other requirements is a total non-starter for any federal government. Quebec also has the SAQ (Société des alcools du Québec) card to play. The final deal-breaker cited by Carney in his news conference the day after the deal collapsed was an attempt by the US to constrain Canada’s ability to freely negotiate trade deals with third parties. It is worth noting that Canada already agreed to this with respect to China when it signed the CUSMA deal in 2018. (Article 32.10), but Carney stressed that Canadian sovereignty is not on the table.

In his explanation of the decision to walk away, Carney also cited the need to protect Canadian culture, although he was non-specific. There is no question that cultural groups and content industries in Canada, such as the press and Canadian content producers, were becoming increasing anxious they might be thrown under the bus. There were reports the US was targeting both the Online Streaming Act (OSA) and the Online News Act (ONA). The enactment of the ONA (aka Bill C-18) in 2023 resulted in Meta blocking the posting of (most) Canadian news content to Facebook and Instagram but led to Google agreeing to contribute $100 million annually to support Canadian journalism. Paul Deegan, CEO of News Media Canada warned earlier last week that if the ONA was given up as a bargaining chip in the trade negotiations, the impact on journalism in Canada would be “catastrophic”.

The threats to the future of the ONA in Canada are ironic given that Australia, which was the inspiration for Canada’s legislation, has just passed new legislation (the News Bargaining Incentive) designed to address the dodge employed by Meta in Canada. When Australia introduced its initial News Media Bargaining Code, Meta reluctantly went along with it and struck a number of content deals with Australian media. It subsequently announced it would not renew them as they expire. In Canada, Meta dug in and delisted postings from Canadian media (although there have been some controversial exceptions) in order to avoid being subject to the legislation that required them to reach deals with Canadian media to license content. To address this, the new Australian legislation imposes a 2.5 percent tax on the advertising revenues of the targeted platforms (Meta, Google, TikTok and LinkedIn) unless they strike agreements with news media providers. The tax would be paid into a fund accessible to local news outlets. The tax amount is higher than payments under the voluntary agreements the platforms are expected to reach, providing an additional incentive for them to reach or renew content licensing agreements. It would be hard to see Australia successfully pursue the goal of requiring the big platforms to contribute to production of the news content they use while Canada, which consciously followed the Australian example, retreats from this objective.

As for the Online Streaming Act, recall that in recent weeks the Carney government notified the CRTC that the foreign streamer contributions to the production of Canadian media and content mandated by the Commission will need to be revisited. Was the OSA part of the recently suspended Section 338 negotiations? No doubt about it. US Trade Representative Jamieson Greer in a midweek tweet congratulating Trump on the “deal” that was seemingly about to be finalized, said it would include “comprehensive market access for all American goods, economic security commitments, digital trade alignment, and many important provisions that will continue to protect our market and American workers…”

What “digital trade alignment” might include was not specified but there was speculation it could encompass a commitment to never introduce a DST, reversal of the Online News Act, data governance limits and limitation or elimination of streaming payments. Now, with the collapse of the talks, none of that will happen—for now. However, the 50% Sec 338 tariffs are now in effect and Americans will be paying much more for Canadian honey, salt and toilet paper, among other things, assuming those items will still be on US shelves.

Canada’s decision to terminate the trade talks last Friday really settled nothing, other than to confirm that the US goal is to bring the country fully into its orbit as a satellite state. Carney and Canadians are determined this will not happen and have cards to play. Those cards relate to the impact of Trump’s decisions on the US economy and US consumers, and the potential impact of these decisions on the midterm elections. Canada would do best to take its time and continue to try to find allies within the US. Whether the announced intention of retaliating against Trump’s Section 338 tariffs on a “dollar for dollar” basis is the right approach is another question, but the intent will be to inflict targeted pain on selected US export sectors in order to build pressure on the Administration. The provincial liquor bans were designed with this in mind and have been remarkably effective.

Eventually Canada and the US will need to get to the USMCA/CUSMA negotiating table. CUSMA is still in force notwithstanding the sectoral US tariffs that violate its provisions on specious “national security” grounds. It is a Congressionally approved treaty and unless renounced, which the Trump administration clearly does not want to do, it remains in force unless renegotiated. When renegotiated, and ratified by Congress, it will provide stronger guarantees of predictability than the back-of-the-envelope trade deals that Trump and USTR have been forcing on trading partners. However, if and when those negotiations take place, the issues that led to the collapse of the Section 338 talks will still be on the table.

Canada’s cultural and content industries don’t have the political clout of the dairy industry, which for decades has managed to put its self-interest before that of the rest of the economy and Canadian consumers, or the auto industry, but maintaining economically viable Canadian voices in media, broadcasting, film and literature is part of preserving sovereignty. How that is best done is the topic of ongoing discussion and debate. For now, the OSA, the ONA and Canada’s other digital legislation remains intact. The sector may have dodged a bullet for now but needs to remain alert. It’s never over until its over.

© Hugh Stephens, 2026. All Rights Reserved.

How to Get the US Streamers to Invest in Canadian Content

A film clapperboard featuring the Canadian flag design.

Image: Shutterstock

It was an unusual, almost clumsy way to disclose an important policy change (or, at the very least, a key policy refinement/clarification). The Carney government has revealed, via a previously undisclosed letter to the Federal Court, that it no longer intends to require foreign streaming services, i.e. Netflix, Disney+, Amazon Prime Video, and others, to make even the base level contribution of 5% of its annual Canadian revenues to support production of Canadian programming. This percentage, which amounts to approximately $200 million annually, was imposed by the CRTC back in 2024 as the first step in its mandated implementation of Bill C-11, the Online Streaming Act (OSA). It was described as a “down payment” on streamer contributions, with the final amount to be announced when the CRTC had completed its hearings and deliberations. As I commented at the time, just about anyone who could get their nose into the broadcasting support trough was to get a piece of the action with no less than 11 entities eligible for a piece of this streamer-funded pie. In response, the levy was challenged in Federal Court by a number of the streamers and studios and as a result, pending a decision which the Court has yet to reach, payment was suspended.

Two years later, in late May of this year, the CRTC finally announced its decision on total streamer contributions. The large US streaming services would be required to contribute 15% of revenues (including the initial 5% base contribution that was under challenge in Court). The outcry was immediate and predictable, with the streamers calling on the government to overrule the CRTC decision (which technically it could not do). Critics claimed the required contribution was a violation of CUSMA and could only be justified by invocation of the Cultural Exception clause, which would legitimize US retaliation. I challenged this assertion but noted that the OSA would be on the table along with many other Canadian policies if CUSMA was to be renewed and renegotiated. Then, just a couple of days later, the government declared it would be issuing instructions to the CRTC to review its decision on streaming contributions, simultaneously announcing the intended creation of an annual $600 million dollar fund to replace the contributions initially expected from the streamers. While the rollback of the CRTC mandated contributions was the key point of the announcement, there was—to say the least—a lot of uncertainty as what obligations would be imposed on the streamers in lieu. Heritage and Identity Minister Marc Miller, the point person on the file, noted that the OSA remains in effect and while streamer contributions would not amount to 15% of annual Canadian revenues, they would not be zero. There is a lot of wiggle room between zero and $600 million. Miller also noted that the initial $200 million payment by the streamers was still held in abeyance because of the Federal Court challenge, and was therefore unavailable to the industry. Keeping the OSA in play while providing an immediate subsidy to the Canadian industry as well as announcing a review policy of options for streamer contributions provides some negotiating room for the upcoming CUSMA talks.

In the world of trade law, replacing the “missing revenue” from the streamers with a taxpayer-funded subsidy is cleaner because a domestic subsidy to a non-exporting industry is far less problematic than a levy on a imported product. At this particularly fraught period in Canada-US trade negotiations, clearing away immediate obstacles to reaching a broader agreement seems to be part of the Carney playbook. Perhaps the government realizes that sacred cows like the NAFTA/CUSMA cultural exception and even dairy supply management will need to be modified in the pursuit of the greater good. Carney’s public explanation—that the government has decided to overturn the CRTC contribution framework because it would result in additional costs to Canadian consumers when the streamers pass on the additional cost to their customers—is about as disingenuous as it gets. If anyone thinks that their Netflix, Disney +, Paramount +, or even Crave subscription is not going to increase over time, then they must be living on some other planet. Moreover, there is about to be an industry shakeup. Once the Paramount takeover of Warner Bros is finalized, watch what happens to HBO in Canada, currently licensed on Bell Media’s Crave service.

Canadian policy makers and the Canadian industry have failed to grasp that you cannot, or should not, require foreign players to fund domestic producers to create Canadian content (CanCon) while simultaneously denying those same foreign entities the right to own or control the marketing and distribution of these productions. That is the current Canadian policy which, for the most part, defines Canadian content not only by who, how and where it was produced, but also by who controls the IP in the production. Even though the CRTC tweaked the definition of CanCon last year to encourage more co-productions (allowing foreign funders up to 80% control), it backtracked on that in its announcement in May of this year.  

The IP control issue is fundamental. From the perspective of those in the Canadian content industry (and those who want to build up the industry), it is necessary to retain control of the IP in a “Canadian” film or series, even though someone else (a foreign studio) is paying for it, in order to build a domestic base through control of back catalogue. From the perspective of the foreign streamers, this is taking a free ride. Eating your cake and having it too.

And then there are the terms of CUSMA. However, whether the funding model laid down by the CRTC is CUSMA-compliant or not is really no longer the point. US interests have argued it is not but given the careful wording of CUSMA, a successful legal challenge would be difficult to mount, as I have argued elsewhere. Nevertheless, the Trump Administration has made it clear that anything in CUSMA, or any other agreement for that matter (such as the revenue sharing arrangements for the Canadian-financed Gordie Howe Bridge between Detroit and Windsor) are targets and can be ignored or re-opened. How much pain can Canada take? This is not a respectful negotiation between trading partners, each with interests to protect, resulting in a compromise both can live with over the longer term, but is instead a one-sided shakedown. As perceived by the current US administration, the US can do pretty much what it wants, and will find any pretext do so (fentanyl, national security, forced labour standards, smoke?) because its pain threshold is higher than Canada’s. Getting the US studios on board by creating an outcome that meets both their commercial needs and Canada’s cultural objectives (by strengthening Canadian production) would be a timely initiative.

Coming back to the recent revelation that even the base contributions mandated by the CRTC in 2024 are no longer supported by the Canadian government, the means of disclosure was obtuse even though the result probably shouldn’t have been a surprise. The letter itself was a clarification requested by the Court to determine whether continuing to hear the appeal launched by the streamers was moot. Maybe the government was concerned the challenge from the studios would be upheld, and the $200 million annual payment never paid. Or maybe it has decided there could be a better way to get the streamers to contribute to Canadian production (as opposed to production in Canada, i.e. US content filmed in Canada). The Canadian Association of Broadcasters claims it has been assured during discussions with officials that contributions (in some form) will still be required from the US streamers. At this point, all the government will say is that policy is under review. The necessity to clarify its position to the Federal Court seems to have been the action-forcing event that made the government come clean on its intent to dispense with the base contribution as well as the CRTC’s additional 10 percent. What will replace these contributions is the big question.

Because of the regulatory process and requirements of law, new guidelines will have to be provided to the CRTC. This will take a while and then the slowrolling, grinding work of the Commission will begin, with hearings and policy papers. Don’t look for quick results. Much of the work the Commission has done on the OSA over the past two to three years has just gone down the drain. Meanwhile, the creative community is nervous. The palliative of $600 million in taxpayer funds in lieu of locked-in streamer contributions is not unwelcome, but “he who giveth” can also take away. A government fund is subject to all sorts of pressures—budgetary deficits resulting in cutbacks or freezes, change of government, etc.—whereas a funding mechanism tied to industry revenues is much more likely to survive over the longer term.

The Carney government has a difficult needle to thread. It needs to keep the Trump Administration engaged as it tries to determine if a reasonable outcome to CUSMA is possible instead of the ongoing, perpetual review (i.e. regular blackmail) apparently favoured by the US, while being seen to stand up for Canadian culture and identity. In terms of building and sustaining a vibrant creative sector, is it in Canada’s interests to require foreign streamers to fund Canadian production while denying them the means to fully exploit the potential of the content they have been required to invest in? Or, is there a better way? Canada has outstanding talent, a strong production base, and interesting stories to tell. The streamers need content for their global platforms. With a policy rethink, hopefully the Carney government will devise a means to encourage and incentivize major international players to invest in and distribute Canadian content. This would be to Canada’s advantage, and to theirs as well.

© Hugh Stephens, 2026. All Rights Reserved.

The CRTC Streaming Announcement, and CUSMA: An Update (It’s Changing by the Day)

Flags of Canada, the United States, and Mexico arranged together.

Image: Shutterstock

Scarcely was the ink dry on the blog I posted on Monday, June 1, when things began to happen. The next day Canada officially informed the US and Mexico that it wished to renew CUSMA, and Dominic Leblanc, Minister responsible for Canada-US Trade (among several other responsibilities) went to Washington to meet with US Trade Representative Jamieson Greer. There he was given the laundry list of US grievances which surely included the Online Streaming Act (OSA) and in particular the CRTC decision to impose a 15% levy on the Canadian revenues of large foreign (read US) streamers to fund domestic Canadian production (only some of which the streamers could use at their discretion). The day after that, June 3, the Carney government announced that it would be providing “direction” to the CRTC to review its decision, on the basis that additional costs imposed on the streamers would likely be passed on to Canadian consumers.

To sweeten the pot, the government announced the creation of a $600 million annual fund to “provide stability and immediate support to Canada’s audio and audiovisual sectors”. This is to offset the funding the streamers may no longer be contributing, including the initial five percent contribution still held up in the courts owing to a legal appeal. Six hundred million dollars is a good chunk of change; it’s about the same amount the streamers would have contributed based on CRTC calculations estimating that the original five percent levy (currently suspended pending a decision from the Federal Court) would have generated $200 million annually. This would suggest either that the streamers may not be expected to make financial contributions or that their contributions will be additional to the base amount. Even though the government has thrown a lot of money at the problem, this has not satisfied the cultural sector however. The Coalition for the Diversity of Cultural Expression (CDCE), a major cultural industries umbrella group, has just issued a press release calling Ottawa’s request for the CRTC to reverse course “a major setback for cultural sovereignty”. The CDCE doesn’t mind the offer of $600 million. It’s just that such funding is at the whim of the government of the day whereas embedded funding through regulation of online streamers would be part of the broadcasting regulatory framework and thus more predictable and reliable.

As for the argument that a levy on the streamers would be passed on to consumers, Howard Law in his blog MediaPolicy.ca points out that “Netflix upped the price on its standard plan from $14 monthly to $15 in 2020. Then to $16.50 in 2022. Then to $19 in 2025. That was twice the rate of inflation.” But of course, no-one could blame the government for these increases. That was just greedy old Netflix. The streamers will price their product at whatever level is optimal from their perspective, just like any other business. If they price themselves too high, people will find alternatives, either a competing service or (horror of horrors), a pirated feed. The industry is well aware of the limits of consumer tolerance, particularly in this age of stressed household finances. Nonetheless, the Carney government’s “concern” for consumers is good politics.

Why didn’t the government just tell the CRTC what rate to set? By statute the government does not have the authority to reverse or overrule CRTC decisions in matters other than the issuance of broadcasting licences (the CRTC being an independent quasi-judicial body), but the government does have the authority to issue policy directives as to how legislation is to be implemented. What that guidance will be, Heritage Minister Marc Miller (the point person on this file), was not willing to say except that the amount of the streamer’s contributions would be reduced. By how much, we do not know. However, he hinted they would still be required to contribute. Once again, the CRTC will need to consult stakeholders and hold hearings. There is lots of wiggle room (or room for further negotiations with the streamers).

There was no mention of the CUSMA negotiations being a factor in the government’s decision but if you don’t think CUSMA was in play, you have been living on another planet. Nonetheless, the action the government has taken suggests it has learned a lesson from its previous policy reversal on the Digital Services Tax, when it scrapped the legislation on the very eve of implementation to appease the Trump Administration and get CUSMA negotiations back on track. That concession achieved absolutely nothing. In the case of the Online Streaming Act (OSA), it will continue in force as legislation for which the CRTC is required to develop implementing regulations. The government has signalled flexibility but has not rescinded the authority of the CRTC to regulate streaming services in Canada, nor has it definitively exempted the streamers from making a financial contribution or meeting discoverability requirements. It thus retains the OSA as a bargaining tool, something it could have done with the DST if it had only suspended the imminent application of the tax instead of withdrawing it completely. Once burnt, twice shy. Its action on the CRTC decision is exactly what it should be doing, signalling flexibility but retaining the essentials of the policy as a bargaining chip.

The other significant development on the trade negotiations front, announced coincidentally on the day that Leblanc and Greer were meeting in Washington, was the announcement by the US Trade Representative’s Office that they will be imposing tariffs ranging from 10 to 12.5 percent on over 60 sixty countries who allegedly either don’t block goods produced with forced labour or do so inadequately. Canada is one of half a dozen countries in the latter category, along with the EU. Everyone else completely fails on this score, according to USTR. Not a single country is exempted although “only” 60 of the US’s major trading partners are targeted. There will be hearings to examine the USTR announcement but the results are a foregone conclusion.

I mentioned in my earlier blog post this week that the Trump Administration will do whatever it takes to justify its unilateral imposition of tariffs, whether or not this is in violation of bilateral and multilateral treaties. Once its “fentanyl tariffs” imposed under the International Emergency Economic Powers Act (IEEPA), were overturned by the US Supreme Court, the Administration resorted to whatever other excuse it could find, including using both national security (Section 232 of the Trade Act of 1962) and balance of payments (Section 122 of the US Trade Act of 1974) as pretexts. These are “temporary” measures authorized by Congress to address specific emergencies. The Trump Administration has made a mockery of these remedies, employing them on the flimsiest of pretexts. But even these measures are time limited, (although for some the time can be measured in years). However, the Section 122 tariffs imposed in lieu of the IEEPA tariffs after they were overturned will expire in July so Trump and USTR had to come up with another justification in US domestic law to maintain their import tariffs. The answer was trade in products produced with forced labour. Suddenly, most of the world’s trading economies are accused of allowing goods produced with forced labour to undermine international markets, so sixty countries must be punished by the US through the imposition of tariffs on their exports to the US. This ludicrous misuse of Section 301 of the US Trade Act is clearly for purposes other than dealing with forced labour.  

While the US does have a robust regime to block the import of products produced with forced labour, it is far from perfect itself. According to the Canadian Centre for Policy Alternatives, a labour oriented self-declared “progressive” publication, last year the Trump administration cancelled around $577 million from the Bureau of International Labor Affairs (ILAB) in grants allocated to various programs meant to promote labour rights abroad. Also, products produced for private companies by prison labour in the US have been a concern. Last year, the University of Toronto produced a report “Uncovering US Prison Labour in Canadian Supply Chains” that concluded “the Canadian supply chain has many likely linkages to prison-made goods from the US, particularly in the automotive and food sectors.”

Canada’s hands aren’t completely clean either. Prime Minister Carney has just announced his government will introduce new legislation this month to strengthen the current Canadian ban on imports made with forced or child labour. However, while forced labour is a real issue, the USTR action is not only hypocritical, it also demonstrates the lengths to which the Trump Administration will go to use any pretext or legal loophole it can find to impose tariffs. Even if Canada had the tightest regime in the world to prevent the import of products produced with forced labour, this would not stop the US from using this, or some other pretext, to fill the tariff gap created by the collapse of the fentanyl tariffs. When the fentanyl tariffs were first announced, Canada responded by creating a “fentanyl czar” and equipping the RCMP with new Blackhawk helicopters for improved surveillance, among other measures to beef up border security. While useful, this did not exempt Canada from US tariff punishment. It wasn’t about fentanyl; it was about imposing tariffs on a trading partner that had naively expected CUSMA rules to be followed.

This has been one of the problems with CUSMA.  While—remarkably considering what has been going on in Washington– much of the trade conducted between Canada, Mexico and the US under the CUSMA/USMCA/TMEC agreement continues tariff-free (for now), the sectoral exceptions introduced by the US based on contrived grounds (e.g. the imports of fentanyl from Canada) raise the question of whether the US really intends to honour what it has agreed to, or will agree to in future. That is also a point I made in Monday’s blog when examining the issue of the Cultural Exception to CUSMA (Article 32.6) and whether the US would try to use it to impose retaliatory tariffs on Canada. Using Article 32.6 against Canada would likely fail “legally” (i.e., the OSA is not a violation of the terms of CUSMA, and therefore Canadian action to implement the legislation would not need to be justified by Article 32.6), but then the US could find another excuse if it really wanted to take action. Fentanyl, national security, forced labour, smoke from Canada. Take your pick.

Assuming the US agrees to extend CUSMA/USMCA through renegotiation, a lot will be up for grabs. For example, the US apparently wants to further increase the percentage of US and North American content in automobiles traded under the Agreement. While a good idea in principle, will it make US or North American vehicles more competitive? Maybe Article32.6, the Cultural Exception that applies only to Canada, will disappear. While in theory cultural industries in Canada can be exempted from the terms of the Agreement, the penalty for doing so is so draconian that the Exception is really more of a political fig-leaf than a policy reality, although it may salve Canadian pride. Canada for its part will want some assurances that the sectoral “national security” tariffs on steel, aluminum and lumber will be lifted and not reimposed on a whim. Whatever eventually happens, some sense of economic certainty and security will be the goal.

Right now, things are changing by the day. Stay tuned for the next update. It could be tomorrow!

© Hugh Stephens, 2026. All Rights Reserved.

The Recent CRTC Decision on US Streamers and CUSMA

Will the CRTC Decision Requiring US Streamers to Make Additional Financial Contributions to Canadian Production Lead to Retaliatory US Tariffs Impacting Other Sectors because of CUSMA’s Cultural Exception Clause?

Should Canada Rescind the CRTC Decision Now to Facilitate CUSMA Negotiations?

Logo of the CRTC (Canadian Radio-television and Telecommunications Commission) featuring stylized lettering and a circular design.

Summary

Since this is a long post on a complex subject, here is the very short version of my answers to these two questions, the Executive Summary if you will. On the first question, I posit that the CRTC decision is not a violation of the terms of CUSMA, and therefore Canada does not need to justify the CRTC measures by using the shield of the Cultural Exception, which if applied could legitimize US tariff retaliation. That is not to say that I agree with the CRTC decision in all its aspects, nor that the Online Streaming Act might not become a bargaining chip in the renegotiation of the Agreement. For the US to justify tariff retaliation on the basis that Canada was using the Cultural Exception as a shield would require a determination by a trade panel. That is most unlikely to happen. Given the general US disrespect for the CUSMA Agreement since the advent of Trump 2.0 and the way in which the US has ridden roughshod over the protections that the Agreement was supposed to provide, the niceties of its text seem largely irrelevant. US streamer’s hopes of securing protection under the CUSMA have been undermined by aberrant US trade policy. As for whether the Carney government should walk back provisions of the Online Streaming Act to facilitate CUSMA renegotiation, the Digital Services Tax climbdown illustrates well the folly of unilateral concessions. The US can wield a big stick, but Canada is not without cards to play. When you are playing with a master bluffer, don’t fold your hand early. That’s the short version. For more detail, read on.

The CRTC Announcement

Since the CRTC announced on May 21 that, among other requirements, it will increase the mandatory contribution to be made to Canadian productions by large foreign streamers (those generating in excess of $100 million annually in Canada) from 5 percent of their Canadian revenues to 15 percent, commentary—largely in the form of criticism– has come from all sides. The CRTC decision itself is not the easiest to understand even with its embedded graphic. The Motion Picture Association-Canada did not mince words;

“The Motion Picture Association strongly condemns the CRTC’s decision to impose unprecedented, unnecessary, and discriminatory investment obligations on American streaming services operating in Canada. This burdensome framework unfairly targets global streamers with requirements that directly violate Canada’s obligations under the United States-Mexico-Canada Agreement (USMCA).”

MPA-Canada and some individual streaming services have already challenged the initial five percent “downpayment” levy on the basis that the requirement for streamers to pay for local news (one of the allocations of the initial levy, not repeated in the new CRTC regulations) is a discriminatory measure exceeding CRTC authority because none of the streamers even produce news coverage. The plaintiffs also argue that the levy constitutes a tax, which is beyond the competence of the CRTC. Indeed, the taxation angle was repeated by Opposition Leader Pierre Polievre who accused the CRTC of imposing a tax that would ultimately be paid by Canadian consumers. He demanded that the Carney government overrule the CRTC, something the government says it does not have the authority to do. If pushed, however, it could of course amend or withdraw the legislation, the Online Streaming Act, that is behind the CRTC actions.

Others were also quick to criticize, including University of Ottawa professor Michael Geist who published the day after the CRTC announcement, pointing out that the Online Streaming Act is already in the crosshairs of the US in the lead up to negotiations to renew the CUSMA/USMCA. Indeed, US Ambassador Pete Hoekstra, who seems to be unable to fathom why Canadians might be upset at a US Administration that has routinely broken the rules it agreed to under Trump 1.0 with the renewal of NAFTA (not to mention the 51st state nonsense), immediately called the CRTC decision “making a bad situation worse”. Geist followed up with another post titled “From Levy to Liability: Why Canada Risks Facing Hundreds of Millions in Retaliatory Tariffs Due to the CRTC’s Online Streaming Act Ruling”.

Copyright Ownership Issues

Now, I am not here to try to justify the CRTC’s Canadian program expenditure announcement, which is a complicated beast. While I believe a legitimate argument can be made that participants in the Canadian broadcast space should be expected to support Canadian content and Canadian production to a certain degree, I have a problem with the requirement that prevents the funders from owning and exploiting, as they see fit, the product they have invested in. I know this view is not shared by many in the Canadian content industry. Part of the CRTC decision involves an obligation to spend 30 percent of their contribution on what is described as “enhanced partnerships”. This is CRTC-speak for production partnerships where Canadians hold the majority of the copyright in the programming.

This would seem to reverse the flexibility in defining Canadian Content (CanCon) that was introduced by the CRTC late last year. As I explained in a blog post last November, the revised CanCon definition outlined by the CRTC for broadcasting and streaming purposes allowed for up to 80% of the copyright in a production to be held by a foreign enterprise, subject to some other CanCon requirements such as the director and screenwriter both being Canadian. This was designed to encourage co-productions, and was a slight relaxation of the hardline rules that required foreign streamers to contribute to Canadian productions but then denied them the right to own and exploit the copyright (including distribution rights) in those productions. Now whatever flexibility that was introduced has been rolled back; at least one streamer production contribution dollar in three must be invested in a production where the rights are held by someone other than the funder, with that person having to be a Canadian. This is despite the fact that the production might have qualified as Canadian (story, director, location, music etc) in every other way. The purpose of the levy is clearly not to promote Canadian content but Canadian production.

Do the CRTC Measures Violate CUSMA Obligations?

While I, like Michael Geist and others, have concerns that the CRTC decision has flaws, and may be indeed become an additional irritant to be dealt with during the forthcoming CUSMA negotiations, my main quibble is with the argument that Canada will face millions in retaliatory tariffs under the CUSMA framework because of the CRTC mandated contributions. Prof. Geist and others are recycling the argument put forward by a US industry group, the Computer & Communications Industry Association (CCIA), claiming that the CRTC decision violates the terms of CUSMA, specifically, Article 14.10 that refers to investment performance requirements;

“No Party shall, in connection with the establishment, acquisition, expansion, management, conduct, operation, or sale or other disposition of an investment of an investor of a Party… impose or enforce any requirement, or enforce any commitment or undertaking…to achieve a given level or percentage of domestic content”

CCIA argues, echoed by Michael Geist, that given this situation, Canada will therefore be required to defend its action by means of the Cultural Exception clause (Article 32.6). This is an “escape clause” that says;

This Agreement does not apply to a measure adopted or maintained by Canada with respect to a cultural industry.

Broadcasting meets the definition of a cultural industry. However, if the CCIA is right and Canada falls back on the Cultural Exception, this is itself a problem because in that case the US would be entitled to retaliate (take a measure of equivalent commercial effect) in any sector. In other words, the automotive, aluminum, steel, mushroom or maple syrup industries, or any other, could be lumbered with retaliatory US tariffs as a result of measures applied to US streamers that are discriminatory or otherwise non-compliant with CUSMA.

If the measures are non-compliant or discriminatory, that is. If they are not, Article 32.6, the Cultural Exception, does not apply and therefore there would be no grounds for the US to retaliate. (Not that the need to respect the terms of CUSMA would stop them, as I discuss below). In the past, I have argued that the Cultural Exception is not applicable. This is because Article 14.10 refers to investment (Chapter 14) whereas streaming services fall under a different chapter of CUSMA, cross-border trade in services (Chapter 15). National treatment (non-discrimination) applies to cross-border services, and the streamers are in fact treated more favourably than their equivalent Canadian streaming counterparts. You can read all about it here.

But what if I am wrong? My interpretation has not been tested in “trade court”, which in the case of CUSMA (Chapter 31) allows for a state-to-state dispute settlement process through establishment of arbitration panels. The US could call for such a panel but could also simply assert that Canadian actions were in contravention of the Agreement and that Article 32.6, the Cultural Exemption, applied. This would allow for the application of retaliatory tariffs. However, under the terms of the Agreement, Canada could challenge the US assertion, and so, in effect there could ultimately be a panel review to determine the outcome.

US Trade Actions to Date

That is how the Agreement is supposed to work, but that process is now effectively irrelevant given that the US has violated both its terms and spirit several times, basically arrogating to itself the right to do anything it pleases. The so-called “fentanyl” tariffs were the first such example, where the US imposed a 25 percent tariff on Canadian goods on the specious pretext that Canada was responsible for “the extraordinary threat posed by illegal aliens and drugs, including deadly fentanyl” which “constitutes a national emergency under the International Emergency Economic Powers Act (IEEPA)”, according to an announcement issued by the US Embassy in Canada.  Quite apart from the fact the US is responsible for enforcing its own border security, not Canada or Mexico, Canada was the source of less than 1 percent (between 0.1 and 0.2 percent in fact) of illegal fentanyl flowing to the US. More fentanyl probably flowed the other way. The IEEPA tariffs were subsequently struck down by US courts as being an unjustified usurpation of the taxing power of Congress.

Not daunted, the Trump Administration has turned to other legislation, such as Section 232 of the US Trade Act of 1974, to impose tariffs on Canadian steel, aluminum, cars, furniture such as kitchen cabinets, and lumber on the basis that such imports threaten US national security. In addition, Canadian goods that do not have a CUSMA certificate of origin are subject to tariffs under Section 122 of the US Trade Act that deals with balance of payments issues. Then there is the Canadian financed Gordie Howe Bridge that the Trump Administration seems to want to keep in limbo because the owner of the competing bridge is a large Trump donor. I could go on, but the point is, the terms of the USMCA/CUSMA seem to exercise very limited restraint on the Trump Administration. Therefore, why would the Administration care whether Canadian measures imposing a levy on US streamers to fund Canadian productions fall under the Cultural Exemption or not? They don’t. If they want to impose a tariff, they’ll find a pretext.

Should Canada Rescind the CRTC Ruling to Facilitate CUSMA Renewal?

From a trade negotiating perspective, for Canada to roll back the CRTC decision now would be a tactical mistake. Look what happened to the planned implementation of a Digital Services Tax. Long planned, with an implementation date well publicized a couple of years in advance, and with the revenue already booked, the Carney government got cold feet and at the last minute cancelled the tax. This was supposedly to get CUSMA negotiations restarted. As I described it at the time, it was a “humiliating climbdown” to mark Canada Day, 2025. Yes, negotiations resumed for a few weeks until the US pulled the plug once again to signal its displeasure with Ontario Premier Doug Ford’s TV ads during the Super Bowl that enlisted Ronald Reagan to fight tariffs. The DST climbdown achieved nothing. That lesson appears to have been learned. The Canadian Government has made it clear it is not prepared to pay an “entry fee” to begin CUSMA discussions, and will not make concessions simply to get to the table. So, from a trade policy perspective, why should it pull the Online Streaming Act, or intervene with the CRTC?

This is not to say the CRTC got this decision 100 percent right. It is also not to say that, hypothetically, elements of the Online Streaming Act might not be on the chopping block as part of an eventual CUSMA 2.0 deal. That is assuming the US can be trusted to implement what it agrees to. As the smaller partner, Canada has always relied on the US sense of justice, respect for the rule of law and a willingness to surrender some sovereignty for greater overall economic and political security as reasons to expect that the US will honour what it agrees to. Under the Trump Administration, that faith has been shaken. The US streaming industry has every right to invoke the supposed protection of CUSMA and to seek protection under the Agreement. The problem is that the current US Administration has so brutally abused the CUSMA framework as to make it scarcely credible. The streamers are being sideswiped by the aberrations of US trade policy.

But back to the topic at hand. Will the CRTC decision on streaming lead to the imposition of hundreds of millions of dollars in retaliation by the US? Probably not, although such an outcome is not impossible. If it happens, it won’t be because of the Cultural Exception clause in CUSMA, but because the US can wield a big stick and will do so if it suits the mood in the White House at any given time. Canada, however, has some cards to play, to use a Trumpian analogy, and those cards (energy security, critical minerals, lower-cost inputs to US industry such as aluminum, specialty steel, and car parts) are important to the US. The Carney government is playing a waiting game on CUSMA negotiations and renewal. The decision on US streamers is just one more element in this high-stakes poker game. When you’re playing with a master bluffer, you don’t fold your hand before the game is over.

© Hugh Stephens, 2026.

Broadcasting Policy Beyond Broadcasting: Canada’s Online Streaming Act and the U.S. Response

By Christine Rose Cooling

(This is an occasional guest post. I am delighted to publish this analysis by Christine Rose Cooling, whose bio you will find at the end of the post).

An illustration featuring a smartphone displaying digital media platforms, a clipboard with media and broadcast regulations, a gavel on a wooden block, and a computer screen with hands holding microphones, labeled 'Online Streaming Act'.

Image: Shutterstock.com (modified)

When then-Minister of Canadian Heritage Pablo Rodriguez introduced Bill C-11, the Online Streaming Act, in the House of Commons in February 2022, he invoked earlier optimism about the Internet as a space for democratic participation and cultural opportunity. This sentiment recalls John Perry Barlow’s 1996 “Declaration of the Independence of Cyberspace,” which infamously imagined the Internet as a space beyond the sovereignty of nation-states, where the “weary giants of flesh and steel” would have no power. That naïve idealism has since given way to emerging concern about the role of global streaming platforms in shredding Canada’s cultural fabric. Left unregulated, Rodriguez suggested, these services risk weakening Canadian sovereignty.

More than three decades after Canada’s last modernization of the Broadcasting Act in 1991, debates about Canadian broadcasting policy returned with renewed intensity. With Royal Assent granted in April 2023, the Online Streaming Act extends the Canadian Radio-television and Telecommunications Commission’s (CRTC) regulatory authority to streaming services operating in Canada, requiring them to contribute to Canadian content (CanCon) production and support the discoverability of Canadian programming.

The Online Streaming Act represents both policy modernization and inertia in an effort to extend broadcasting policy beyond national broadcasting systems. Although the Act incorporates streaming platforms into the Broadcasting Act as “online undertakings,” these services differ fundamentally from traditional broadcasters—think spectrum allocation, scheduled programming, and territorially bounded signals.

Canada is not alone in attempting to retrofit twentieth-century broadcasting frameworks to the regulatory challenges posed by twenty-first-century streaming platforms. What distinguishes the Canadian case is the degree to which such efforts unfold within a trade environment shaped by structural dependence on access to U.S. markets, making Canadian cultural regulation unusually susceptible to bilateral pressure. Further, the Act operates within a volatile geopolitical arena in which platform regulation is being interpreted through the language of free trade and industrial competition rather than longstanding cultural logics.

Enter Stage Left: The U.S. Response

In June 2024, the CRTC announced that major online streaming services would be required to contribute five per cent of their Canadian revenues toward domestic production funds supporting Canadian and Indigenous content, including genres the streamers do not produce, such as news reporting. The decision has since been the subject of dispute by Apple, Amazon, and Spotify as well as the Motion Picture Association-Canada, though streamers will likely be prepared to pay some amount.

More recently, on March 19, 2026, Congressman Lloyd Smucker introduced the Protecting American Streaming and Innovation Act in the U.S. House of Representatives. This draft legislation, if adopted, would direct the U.S. Trade Representative (USTR) to investigate whether the Online Streaming Act discriminates against American streaming companies. The bill sets the stage for retaliatory action under Section 301(c) of the U.S. Trade Act of 1974 if such discrimination is found and if Canada does not remedy the discriminatory measures within 180 days, although use of Section 301 would violate the Canada–United States–Mexico Agreement (CUSMA).

Article 19.4 of CUSMA requires that countries treat digital products from other member states no less favourably than their own. In principle, this national treatment provision applies to streamers operating in Canada. However, Article 32.6 creates a broad exception for cultural industries, allowing Canada to adopt cultural policy measures affecting broadcasting and audiovisual production even if they conflict with the agreement. While specific U.S. industry interests have argued that Canada may need to rely on Article 32.6 to justify the measures it is taking under the Online Streaming Act, it is important to note that to date the U.S. government has not formally adopted this position. That said, the exemption does not eliminate the possibility of U.S. retaliation; indeed, it explicitly legitimizes it. Under CUSMA, the United States may respond with measures of equivalent commercial effect in any sector if it determines that Canadian cultural policies disadvantage American firms. Canada can, however, challenge whether Article 32.6 is applicable. Also, an argument can be made that the way in which the Online Streaming Act regulates streaming services is not discriminatory, i.e. it does not violate national treatment obligations.

Although Congressman Smucker’s Protecting American Streaming and Innovation Act may never see the light of day as it is but one of many bills introduced into Congress to highlight issues of concern to U.S. industry interests, it nonetheless renders the politics of broadcasting policy quite visible. Smucker’s unlikely counter-legislation—decrying the Online Streaming Act as an attack against U.S. companies, creators, and workers—makes it blatantly clear how debates about cultural regulation increasingly extend beyond national institutions. Such actions function less as the basis for dispute settlement than as policy posturing intended to exert bilateral pressure on Canada.

From Signals to Streaming

Canadian broadcasting policy has long been shaped by historical disputes, cultural tensions, and geopolitical pressures. From the early licensing of commercial radio stations in the 1920s to the establishment of the Canadian Broadcasting Corporation (CBC) that we know (and at least some of us love) today, Canadian broadcasting policy developed not just as an industrial response to spectrum scarcity but also as cultural protectionism against American dominance over Canadian airwaves.

Conundrums aside, legacy regulatory strategies like Canadian content (CanCon) requirements and ownership rules remain measures through which broadcasting policy has sought to pursue cultural objectives beyond economic ones. The Online Streaming Act extends this analog-era regulatory philosophy into the digital age, transforming unresolved debates over the legitimacy of Canadian cultural regulation.

We should also remember that the transformation of broadcasting policy in Canada did not emerge suddenly with the Online Streaming Act. During the CRTC’s Let’s Talk TV hearings between 2013 and 2014, the Commission heard from Netflix representative Corie Wright who argued that online streaming services primarily supplemented rather than replaced traditional broadcasting services. Netflix declined to provide evidence supporting this claim, and the Commission ultimately ruled the argument as anecdotal. This line of uncertainty later informed the work of the Liberal-appointed Broadcasting and Telecommunications Legislative Review panel, whose 2020 report Canada’s Communications Future: Time to Act recommended restructuring communication legislation to reflect a new networked environment. Among its most consequential recommendations was the proposal to extend regulatory authority over online streaming services operating in Canada.

Concerns about the trade implications of regulating online streaming services are, likewise, not new at all. Early in 2020, Professor and Canada Research Chair in Internet and E-Commerce Law at the University of Ottawa, Michael Geist, warned that requiring foreign streaming services to contribute to Canadian production funds without equal access to those funds could invite retaliatory trade responses. Similar concerns surfaced in 2022 before the bill passed, when former U.S. Trade Representative Katherine Tai officially took notice of the Online Streaming Act during a CUSMA meeting with Canada’s former Minister of International Trade, Mary Ng.

Despite the unlikelihood of its adoption, Smucker’s Protecting American Streaming and Innovation Act represents less a sudden escalation than a continuation of a contested shift in how cultural regulation is interpreted both within and beyond Canada. This is entirely unsurprising, as platform infrastructures shaped by recommendation systems, black-box algorithms, and cross-border media flows increasingly blur the boundaries between cultural forms and digital markets.

© Christine Rose Cooling, 2026

Biography

Christine Rose Cooling is a PhD student in Communication & Culture at York University whose research examines how Canadian cultural policy continues to shape cultural expression in a platform-mediated media environment. Her work focuses on broadcasting regulation, streaming platforms, and the cultural significance of live music within contemporary debates about national identity and cultural sovereignty.

US Musicians Unsuccessfully Seek Royalty Benefits in UK they are Denied in US: Maybe They Should Fix the Problem at Home?

A cheerful radio host sitting at a desk with a microphone, computer, and coffee cup, wearing headphones, with an 'ON AIR' sign in the background.

Image: Shutterstock

US artists and musicians, unable to get Congress to grant them royalties for their performances broadcast over terrestrial radio networks in the US, continue to try to obtain in foreign countries what they cannot get at home. Sometimes they have been successful, as in the case of Canada where as part of the update of NAFTA and its replacement by the Canada-US-Mexico (CUSMA) Agreement (or USMCA if you prefer) in 2020, Canada granted US performers “national treatment”. This means they get treated “no less favourably” than—i.e. just as well as—Canadian performers with respect to royalty payments. In other words, they get paid.  Canadian performers in the US also get national treatment, which means they get treated just as badly as their US counterparts, receiving no royalties at all when their music is broadcast terrestrially. The US music industry, or at least the part of it affected by US restrictions on royalty payments (performers and labels), has long lobbied to remove this inequity. A few years ago legislation designed to fix this problem, the American Music Fairness Act, or AMFA, was introduced into Congress. As I explained at the time;

“US terrestrial radio stations are not required to pay royalties to performers or labels for playing recorded music on air. Online broadcasters and streaming services do, but not over-the-air AM/FM radio stations. Terrestrial stations do, however, pay royalties to composers and songwriters for music played on air, but not to performers.”

It is a strange, assymetric exemption from the requirement to pay royalties. Passage of AMFA would close this loophole by ensuring that performers (artists, singers and musicians) as well as owners of the sound recording copyright, normally labels, receive royalties when a work is broadcast commercially on terrestrial radio. But the AMFA bill, and successive versions introduced since, did not make it across the finish line.

If this seems odd and inequitable, it is. It relates to the influence of the National Association of Broadcasters (NAB) in Congress. For decades the NAB has managed to block legislation that would fix this anomaly by arguing that terrestrial stations provide “free airtime” that promotes new recordings. This is a specious argument akin to the canard that platforms distributing pirated content promote legitimate business by giving new content greater exposure. If the “free exposure” argument was ever valid, it is no longer in a world where new music is promoted on digital radio channels and through Spotify, YouTube and Tiktok. Nowadays, triggering algorithmic discovery is key, yet over-the-air radio stations are still getting a free ride when playing recorded music. Given the strength of the NAB lobby don’t look for AMFA to pass Congress any time soon, despite the concerted efforts of the American Federation of Musicians. And it is not just a US problem. Not only do US performers not get paid when their music is broadcast terrestrially on radio in the US, neither do non-US performers or labels. This leads to another dimension of the issue.

The failure to allow foreign performers to collect royalties in the United States usually has a knock-on effect for US artists when their music is played abroad–unless the US has been able to obtain national treatment through a special bilateral agreement. Performers’ organizations in other countries object to US musicians being granted royalties in their own country because if US artists gain access to a national royalty pot, the amount paid out to domestic performers is reduced (by the amount paid to US artists). When US artists are denied royalty payments on the basis of reciprocal as opposed to national treatment, the collected royalties that would normally go to American performers are redistributed to domestic counterparts or retained by performing rights organizations for the benefit of the domestic music industry as a whole. Normally, payments going to US performers abroad would be offset by payment of royalties in the US to foreign musicians–and everyone would gain–but because of US legislation, the US royalty revenue stream for this music category is non-existent, for everyone. Therefore, from the point of view of domestic musicians, it is unfair for US artists to expect a benefit abroad that is denied to foreign performers in the US. International copyright treaties allow for withholding of national treatment benefits under the principle of material reciprocity. Put bluntly, this means that “If you withhold royalty payments from our performers, we will do the same to yours”.

While material reciprocity is a well recognized principle of international copyright, it’s not all that simple because there are provisions in some international treaties that require national treatment (i.e. payment of royalties) for recordings based on where they are first released even if the artists themselves are from countries (like the US) that deny royalty benefits. This would override reciprocity provisions. In 2020, the EU Court of Justice ruled that denial of royalties to US performers in Ireland on the basis of reciprocity was inconsistent with EU law, which does not mention reciprocity. Since then the Netherlands and Sweden have dropped the reciprocity rule and allow payment to US performers, but most EU countries still do not. Nor does the UK, a non-EU member since January 31, 2020.

It is ironic that Ireland was the jurisdiction where US performers made a legal breakthrough in terms of overseas royalty payments given the WTO Irish Music case. Here the US continues to ignore a WTO panel finding made over 25 years ago, in 2000. The WTO panel ruled that another royalty exemption, in this case a US law that allows business establishments to play licensed music without royalty payments as long as it is “background music”, is non-compliant with US treaty obligations. The US Administration at the time was unable to get Congress to amend the law and offered to pay compensation, but this lasted only three years. This case remains an outstanding irritant between the US and the EU, with the US continuing to say that it will “work closely with the U.S. Congress and will continue to confer with the European Union in order to reach a mutually satisfactory resolution of this matter.” So far nothing has happened, and Irish musicians are out of pocket at least $1 million dollars a year for Irish music played as background entertainment in US business establishments. (i.e. Irish pubs in the US).

If you are looking for consistency in abiding by trade obligations when it comes to large countries versus small ones, you will be disappointed. The Irish Music Case is a good example of assymetric respect for international trade rules. The Donald Trump technique of respecting trade obligations very selectively, or not at all, is not a new phenomenon, although it is far more apparent today. In any event, if you are an advocate for a particular constituency, such as US performers, consistency is not the issue. Results are. It was in this vein that the American Federation of Musicians (AFM) challenged recent British legislation that denied payment of royalties to US performers. The UK has maintained the principle of material reciprocity for many years, but its recent accession to the CPTPP Trade Agreement (the Comprehensive and Progressive Agreement for Trans-Pacific Partnership) opened the door, or so thought the AFM , to revisiting the issue. They brought forth a number of interesting arguments, but in the end did not prevail. In my next blog post, I will look at the issues raised, and the reasons for the British court’s decision.

At the end of the day, the best solution for everyone would be to close the US loophole. This would eliminate the reciprocity issue once and for all. Maybe it’s time the AFM redoubled its efforts to fix the problem at home.

© Hugh Stephens, 2026. All Rights Reserved.

The Online Streaming Act or Dairy Supply Management: Which one should Canada Surrender to the US in CUSMA Trade Negotiations? Or is it a Question of Putting Some Water into the Wine of Both?

A person pouring water from a ceramic jug into a large clay pot.

Image: Shutterstock

Should Canada give up the Online Streaming Act (OSA) in forthcoming CUSMA negotiations in order to preserve dairy supply management, as a former Vice Chair of the CRTC, Peter Menzies, suggested in a Globe and Mail oped earlier this month? Perhaps he was just being deliberately provocative although the question hits one of the raw nerves of Canadian politics. The cultural community– particularly in Quebec–would be enraged if this happened. But then if supply management is watered down to allow more imports from the US, especially in dairy, the dairy farmers–particularly in Quebec–will be equally enraged. Which group has the greater political clout? In both cases, Quebec-based interest groups have a card to play denied to others in Canada. It is called the Bloc Quebecois, and if enough support bleeds from the Liberals to the Bloc, that could just open the way to the Conservatives to form the national government they so desperately crave. The cultural mavens in Toronto have little choice; either support the Liberals or face a worse fate when those Conservative cowboys from Alberta take the reins of power.

The Quebec cultural community which insists that measures are needed to ensure that foreign streamers both contribute financially to support Canadian content (Cancon) and ensure that Cancon (when expressed in French) is “discoverable”, has yet another card up its sleeves. It is called Bill 109, Quebec legislation (that is probably ultra vires since broadcasting clearly falls within federal jurisdiction) that purports to regulate the discoverability of French-language cultural content in the digital environment. If Canada gives way on the Online Streaming Act in CUSMA negotiations, watch Quebec fill the void. So where does all this leave the Carney government? Between a rock and a hard place.

It is true, as Menzies has pointed out, that the CRTC has been very slow, plodding even, in dealing with implementation of the OSA. It may even be overwhelmed, with inadequate staff as he suggests. The fact that implementation is still a work in progress makes it easier for the US government to bring pressure to stop or at least to modify rollout of the legislation, whereas other objectives mentioned in recent USTR hearings, such as changes to the Bank Act to benefit US financial institutions or measures to terminate supply management would require significant legislative and regulatory change to undo measures that have been in place for decades. Best to nip it in the bud, or to kill it in the egg, as they say in Quebec.  

Canada’s planned introduction of a Digital Services Tax (DST) is a prime example of a nipped-in-the-bud policy. A DST deals with tax avoidance measures implemented by large digital multinationals by taxing their in-country revenues rather than their manipulated profits. Some countries, such as the UK, France, Spain, Italy etc had already implemented a DST before Trump’s return to office and seem to have got away with it, even though Google, Microsoft, Amazon, META and others of that ilk have the Trump Administration’s ear. Canada intended to implement a DST several years ago but dithered and dragged its feet, finally passing legislation in 2024 that would have brought a DST into effect on June 30, 2025, backdated to 2022 when the law should have been put into effect in the first place. Unfortunately for Canada, the implementation date fell right in the middle of the Trump tariff war and Canadian efforts to negotiate some relief. But rather than postponing implementation yet again–and using the possibility of a future DST as negotiating collateral–Canada “bravely” announced it was going ahead with implementation (regardless of the consequences). Until it wasn’t. Trump tweeted that he was cancelling trade negotiations with Canada because of the DST and voilà, over a weekend, the DST was cancelled (on June 29, 2025).

Trade talks resumed and actually appeared to be making some progress with respect to sectoral tariffs such as steel until the next excuse Trump found to end them. This time it was over Ontario’s World Series free trade ads that ran on US television, using Ronald Reagan’s words from a 1980s era speech praising free trade and condemning protectionist tariffs. The content of those ads may have been accurate, but the result was one of Canada’s more prominent “own goal” moments. While Doug Ford may have derived some brief satisfaction from getting under Donald Trump’s skin, the steelworkers of Sault Ste. Marie, who might have benefited from a rumoured sectoral deal on steel, have been paying the price. I think this fiasco helps explain the public anger of US Ambassador to Canada Pete Hoekstra (who surely wins the 2025 “Bull in a China shop” award) who crudely vented his frustration that a deal so close to fruition got blown out of the water through Premier Doug’s ill-considered initiative.

But what about supply management? Canada should be taking a long, hard look at the wisdom of continuing to defend this 1970s policy that almost every other country has since abandoned. Instead, it should use the CUSMA negotiations as the reason to ditch a monopoly that protects a few chosen producers of supply managed commodities at the expense of consumers and the rest of the economy. Unfortunately, that won’t happen because of Canadian political realities but there is still scope for some wiggle room. In recent years, Canada has been forced as part of its trade negotiations to open slivers of the dairy market to EU countries, CPTPP trading partners, and to the US through the CUSMA. The dairy industry screamed blue murder but was paid off for having to face a bit more competition. As part of liberalizing as little as possible, Canada routinely plays games with its commitments by awarding import quotas to the same domestic dairy industry with which exporters of dairy products to Canada are competing. Some additional foreign cheese and dairy products become available to consumers but in effect the fox is in charge of deciding which chickens get let in, and at what price. Even though this policy is an albatross around Canada’s neck, such is the power of the dairy industry (which is reputed to control the outcome of no less than eight ridings in Quebec) that all political parties support keeping supply management off the table in all trade negotiations, and passed legislation to this effect. In a political environment where the government is one vote short of a majority, risking the ire of Quebec dairy farmers is a risky business.

Does that mean that supply management is completely off the table and instead there should be another sacrificial lamb, such as domestic broadcasting and cultural policy, as Peter Menzies has suggested? This is a doubtful proposition. Despite all the posturing about supply management being “off the table”, there will almost certainly be some concessions to the US, even if it is only in the way the tariff free import quotas are managed. The Carney government will claim it is defending supply management, while making some tweaks to the system. It can do the same for cultural industries. Defend the essence but find compromises that US industry can live with.

Like supply management, the Online Streaming Act also has wiggle room in its implementation. Already we have seen the CRTC announce changes to Cancon definitions that introduce greater flexibility and go some way toward meeting the concerns of the (largely US-based) content streamers, while preserving elements of protection for Canadian production. (Canadian makeup and hair design artists will be happy as use of their services adds an element of “Canadianness” to a production that could be useful in meeting the Cancon definition. This just goes to show that you can never discount the influence of a specific lobby). While the US has laid out some maximum wish-list objectives, including withdrawal of the Online Streaming Act (as well as the Online News Act), there are domestic political realities in Canada that will constrain Canadian trade negotiators from sacrificing the cultural sector to gain other objectives, just as there are with regard to supply management. The US may hold a big stick in the negotiations, but Canada is not without cards to play. It just has to be careful how to play them, and when mobilizing support inside the US to do so in a way that does not offend the touchy amour-propre of Donald Trump.

The end result for Canada will not be water or wine, but rather how much water to allow into the wine. Some dilution will be necessary but at the end of the day, for domestic political reasons (particularly in Quebec), the liquid in the glass still will still have to resemble wine more than water. This applies equally to cultural industries and broadcasting as well as to supply management. It is far from an either/or situation.

© Hugh Stephens, 2026. All Rights Reserved.