Alignment on digital trade threatens Canada’s ability to have a say over our lives online

Keldon Bester is the executive director of the Canadian Anti-Monopoly Project (CAMP) and a fellow at the Centre for International Governance Innovation (CIGI)

Wednesday morning brought the news that a three-day reprieve from new American tariffs had been reached by negotiators, providing uneasy relief to Canadians wondering whether we would buckle under this round of trade pressure. 

But among the usual list of points of negotiation – autos, dairy, alcohol – was a mention by the United States Trade Representative of alignment on digital trade. That alignment could be the death knell for the future of Canada’s ability to have a say over our lives online. 

What does digital trade mean? Though the trade turmoil of the second Trump Administration has been dominated by tariffs on the flows of physical goods, just as important are the rules that govern the intersection of trade and intangible digital markets.  

Much like their counterparts for the trade of physical goods, digital trade rules set the standards for how digital businesses can operate across borders. Crafted correctly, these rules can help Canadian companies grow and scale their businesses abroad.  

But who writes these rules matters, because it helps determine who benefits from them. 

It may surprise Canadians to learn that we are already substantially “aligned” with the U.S. when it comes to digital trade. Chapter 19 of CUSMA details several digital trade provisions covering topics like cross-border flows of data, the location of computing facilities, and access to the source code underlying digital services.  

The problem is that Chapter 19 represents a Big Tech trade policy wish list that has already been used to stifle efforts to rein in the excesses of these companies. Trade tension has already defeated Canada’s efforts to tax the revenue of digital giants, in retrospect a fruitless gesture given our current predicament. The same spectre looms over future efforts to have a say over the digital sphere.  

Before Parliament rose for the summer the government introduced the Safe Social Media Act and the Protection of Privacy and Consumer Data Act, aimed at protecting the safety and privacy of Canadians online. This coming January, Canada’s Competition Bureau will be taking on Google’s dominance in the online advertising market, critical to both Canadian journalism and businesses across the country that need to reach their customers.  

Each of these efforts has the potential to inflame our relationship with the U.S. under the guise of so-called discriminatory treatment of the largest companies in the world. 

The early language of the USTR suggests Canada is walking further down this path of digital dependence. Depending on the extent of this “alignment” with the U.S., Canada could be sacrificing not just tax revenue but the ability to govern a critical domain of our social, political and economic lives.  

Since early 2025 Canada has woken up to the risks inherent to our tight integration with the U.S. Canada benefited for a time from serving as a branch-plant economy for American companies. Now, those companies are being instructed to close up shop and return south.

Why then are we entertaining agreeing to repeat past mistakes by cementing a rulebook for major American tech firms? The domination that has played out in market after market – search, app stores, cloud computing – and is now encoded into trade agreements may be about to repeat itself with markets like those for frontier AI capabilities. 

While the emergence of competition of competition from open weight models from other jurisdictions like China provide some hope, Canada will likely act to preserve access to models from American companies like Anthropic and OpenAI. If alignment on digital trade buys us a few tariff-free days, we should expect access to these models to be conditioned on continuing to play ball with the President. 

In contrast to the celebratory tone of the USTR, Prime Minister Carney has said there is still important work to be done on U.S.-Canada trade front. That work should include preserving our freedom to have a say over our digital lives.