If the first salvo fired by U.S. President Donald Trump in the form of a threatened 25-per-cent across-the-board tariff on Canadian goods (excluding energy, which would face a 10-per-cent levy) is a preview of future trade disputes, retaliatory tariffs alone will not solve the problem. Canada will need to turn to eliminating interprovincial trade barriers, rely on European and Asian trade deals to engage in new markets, and prepare for the prospect that long-standing Canadian regulations and market restrictions may face increasing pressure for an overhaul.
My Globe and Mail op-ed argues the need for change is particularly true for Canadian digital and cultural policy. Parliamentary prorogation ended efforts at privacy, cybersecurity and AI reforms and U.S. pressure has thrown the future of a series of mandated payments – digital service taxes, streaming payments and news media contributions – into doubt. But the Trump tariff escalation, which now extends to steel and aluminum as well as the prospect of reviving the original tariff plan in a matter of weeks, signals something far bigger that may ultimately render current Canadian digital and cultural policy unrecognizable.
Our cultural frameworks are largely based on decades-old policies premised on marketplace protections and mandated support payments. This included foreign ownership restrictions in the cultural sector and requirements that broadcasters contribute a portion of their revenues to support Canadian content production.
As we moved from an analog to digital world, the government simply extended those policies to the digital realm. But with Mr. Trump appearing to call out what he views to be Canadian protectionist policies in sensitive sectors such as banking ownership, the cultural and digital sectors may be next.
If so, there are no shortage of long-standing policies that tilt the playing field in favour of Canadians that could spark some uncomfortable conversations.
Why do U.S. companies face ownership restrictions in the telecom and broadcast sectors? Why are Canadian broadcasters permitted to block U.S. television signals in order to capture increased advertising revenue? Why do Canadian content rules exclude U.S. companies from owning productions featuring predominantly Canadian talent?
The Canadian response that this is how it has always been is unlikely to persuade Mr. Trump.
Canadian policies premised on “making web giants pay” may also be non-starters under Mr. Trump. For the past five years, the Canadian government seemingly welcomed the opportunity to sabre rattle with U.S. internet companies. This led to mandated payments for streaming services to support Canadian film, television and music production; link taxes that targeted Meta and Google to help Canadian news outlets; and the multibillion-dollar retroactive digital services tax that is primarily aimed at U.S. tech giants.
Not only have those policies raised consumer affordability and marketplace competition concerns, they have also emerged as increasingly contentious trade issues. If the trade battles with the U.S. continue, the pressure to scale back the policies will mount.
Beyond rethinking established cultural and digital policies both new and old, the bigger changes may come from re-evaluating the competitive impact of policies that rely heavily on regulation just as the U.S. prioritizes economic growth through deregulation. Proposed Canadian privacy, online harms and AI rules have all relied heavily on increased regulation, looking to Europe as the model.
For example, consider the Canadian approach to AI regulation in the now-defunct Artificial Intelligence and Data Act. It specifically referenced the European Union’s regulatory system, which establishes extensive regulatory requirements for high-risk AI systems and bans some AI systems altogether.
However, the European approach is not the only game in town. Mr. Trump moved swiftly to cancel the former Biden administration’s executive order on AI regulation, signalling that the U.S. will prioritize deregulation in pursuit of global AI leadership. Further, the arrival of DeepSeek, the Chinese answer to ChatGPT, took the world by storm and served notice that U.S. AI dominance is by no means guaranteed.
The competing approaches – U.S.-style lightweight regulation that favours economic growth against a more robust European regulatory model that emphasizes AI guardrails and public protections – will force difficult policy choices that Canada has thus far avoided.
Indeed, we never really tried to reconcile two competing objectives: driving economic growth through AI investment and establishing regulatory guardrails to protect against potential AI bias and harms. That led to billions in new government spending to support new data centres in the hope of fostering a globally competitive industry and the introduction of European-style regulations that risk making Canada a less attractive destination for AI investment.
The Canadian government may yet opt for the regulatory model, convinced that AI safeguards are more important than economic success (or bet that the two do not necessarily conflict). However, the threat of Trump tariffs reframes the U.S.-Canada relationship as competitors more than partners, forcing us to re-examine our plans for future regulation and potentially uproot our entrenched cultural and digital policy frameworks.
