Canadians dodge a huge tax hit, thanks to Trump

Trump blocked a damaging digital services tax that would have hit Canadian consumers hard

Canadian taxpayers owe a bit of thanks to U.S. President Donald Trump. His intervention has effectively saved Canadians billions of dollars by forcing the government to scrap the proposed Digital Services Tax (DST), a tax that would have made life more expensive for consumers across the country.

The DST, designed to tax big tech companies like Google, Amazon and Meta, was sold as a way to ensure these multinational giants paid their fair share in Canada. These companies make massive profits from Canadian consumers but contribute little in taxes here. The idea was simple: tax the tech giants who profit from Canadians. The reality was far different. The costs would have been passed on to regular Canadians through higher prices for online shopping, digital advertising and social media services.

Had the tax gone ahead, Canadians would have faced an estimated $189 per year in digital service costs. This estimate is based on the anticipated revenue from the DST, divided by Canada’s population. It’s important to note that the actual impact would vary—those who use digital services more frequently would have faced a higher share of the burden, while occasional users would have felt less of the pinch. Still, the potential cost was significant, and it would have added to an already heavy financial load for Canadian consumers.

Small businesses across Canada would have also felt the burden. Many rely on platforms like Google and Facebook to advertise their products. If the cost of advertising increased due to the DST, it would have meant higher prices for products or reduced services to make up for the added expenses. The ripple effect of this tax would have extended far beyond the tech giants.

Trump saw the digital tax as a major obstacle to U.S.-Canada trade talks, and he wasn’t shy about making his demands clear. Canada would have to drop the tax if the negotiations were to proceed. Ottawa wisely heeded his warning. The risk of escalating trade tensions was too great, and Canada was right to pull back.

Critics will claim that Canada caved to U.S. demands, but the reality is far simpler: the $7.2 billion Ottawa expected from this tax now stays in the pockets of Canadians. Instead of being squeezed by a poorly conceived tax, Canadians keep that money for themselves.

The DST was an attempt to level the playing field between big tech and Canadian taxpayers, but it missed the mark. It was a half-baked solution that would have unfairly burdened everyday Canadians while doing little to challenge the real issue—how to tax tech companies in a globalized, digital economy. The big tech companies were not likely to feel the full brunt of the tax. It was Canadians who would have paid the price.

While the DST was a misguided approach, there are more effective ways for Canada to ensure that tech companies pay their fair share without burdening consumers. One critical measure is strengthening Canada’s competition policy. The government can build on existing anti-monopoly laws to ensure that tech giants are held accountable for anti-competitive practices, such as data hoarding or predatory pricing, which harm smaller businesses and consumers alike. Additionally, implementing platform neutrality regulations would prevent companies like Google or Facebook from prioritizing their own services unfairly.

Canada should also consider data portability rules that allow consumers to easily move their data between platforms. This could help reduce the power that tech giants have over users, fostering a more competitive environment for smaller firms to emerge.

Canada is not alone in trying to tax big tech. Many countries around the world have faced similar issues, including the European Union and the United States, which have introduced their own measures. But a blanket tax that impacts consumers without addressing the underlying problem of global tax evasion isn’t the answer. Canada needs a more thoughtful approach that targets the real issue: ensuring large tech companies pay their fair share while not punishing everyday people or small businesses.

For once, Canadians should thank Trump. His intervention prevented a harmful tax that would have hurt consumers for no good reason. Whether you agree with his politics or not, his actions had a direct, positive impact on millions of Canadians—and that is something worth acknowledging.