The Digital Services Tax (DST) that enforces large tech companies to make a hefty back payment in June of this year could be a potential trade target for U.S. president Donald Trump.

Under the administration of former president Joe Biden, the U.S. was already pushing back on the tax. And on his first day back in office last week, Trump signed an executive order withdrawing the country from an international effort to establish digital tax rules. The order directs the country’s treasury secretary to investigate countries with tax rules that are “extraterritorial or disproportionately affect American companies.”

“With President Trump back in office, Canada’s Digital Services Tax is now a trade risk. His first administration made it clear, DST targets U.S. companies, putting Canada in a difficult position. Meanwhile, Canadian advertisers are already absorbing this cost, adding undue pressure on our Canadian advertising industry,” Shannon Lewis, president of CMDC, tells MiC.

“At a time when economic stability and innovation are critical, we urge the federal government to reassess this policy and prevent unnecessary trade tensions,” Lewis adds. “High tariffs and escalating trade disputes impedes growth, but with the right policies, Canada can remain a highly attractive destination for investment, talent, and innovation. Reimagining growth is critical for building a stronger and more resilient Canadian economy – and it’s top of mind for many leaders today.”

The DST imposes a 3% levy on the revenue that foreign tech giants generate from online users in Canada. It applies to companies that operate online marketplaces, online advertising services and social media platforms, and those that obtain revenue from sales of user data, including Amazon, Google, Facebook, Uber and Airbnb. This year, companies would have to file their tax returns by June 30.

Geoff Crain, VP of sales and digital for Kingstar Media, says Trump erasing the DST would be an ideal scenario for Canadian media buyers and advertising agencies.

“From a media buying perspective, the digital services tax strategy from the Canadian government was not effective as the tech giants simply passed the tax along to the advertiser. This meant that the tech giant faced no additional levy because all they did was bill the end user to cover the 3% charge,” Crain says. “This affected businesses of all sizes as their costs for digital advertising increased by 3%. Margins on media are already very tight and what most advertisers did was just drop their advertising budget by 3% to account for this added tax.”

Crain adds, “In the end, the digital services tax has impacted total revenue for advertising agencies and media buyers as advertisers dropped their budget by 3%, it created tax complications for businesses who have to account for this on their invoices, and it had no financial effect on the tech giants bottom line because they did not incur any of the cost (just a pass-through charge).”

However, experts say the tax may not be the only aspect of Canadian online regulation in the spotlight. The Online Streaming Act (Bill C-11) could attract Trump’s attention, in part because there are highly influential tech companies now closely tied to the president, and none of them agree with the Act.

The bill amended broadcasting legislation to incorporate online platforms in 2023. Since then, some businesses have questioned it, particularly the demand for large international online streaming corporations to contribute to Canadian content creation. In recent days, groups representing U.S. and large tech businesses warned the Canadian Radio-television and Telecommunications Commission (CRTC) that its efforts to implement the bill could worsen the trade conflict with the U.S. The Motion Picture Association of Canada, which represents companies like Netflix, Disney and Amazon, also recently launched an ad campaign against the bill.

Another Trump target could be Canada’s Online News Act (formerly Bill C-18), which forces tech companies to sign agreements with news publishers. The Act, which came into effect in 2023, aims to ensure that online platforms that make Canadian news content available fairly compensate Canadian news organizations. So far, Google has been the only company affected by the legislation, having contributed $100 million to Canadian news organizations through the Canadian Journalism Collective (CJC).

“I think it’s a stretch to assume that the Online News Act would have significant influence over tariffs. But if it does offer any leverage at the negotiation table, then it’s a no-brainer — scrap the bill. We’ve never supported Bill C-18 and believe it has had only net negative effects on small to mid-sized publishers in Canada,” Chuck Lapointe, CEO of Narcity Media group, tells MiC.