Payment Due: Trump Goes Ballistic Just Before POUTINE DAY

On June 30^th digital services offered by the likes of Amazon, Meta, Google and Uber face a levy on revenues generated from Canadian users.

On Tuesday, July 1^st, Canadians celebrate “Canada Day” – a four-day weekend of eating poutine and drinking real (alcohol content 5%+) beer.

They would otherwise seem to have nothing in common, except that the biggest threat to Canada in generations is coming from the US: specifically, Donald Trump.

Vowing to make Canada a US state and merge the country with the US, Trump has instead sparked a surge of patriotism across the nation.

I know: a Trump move that caused exactly the opposite effect. Who would have guessed?

Drilling even deeper into the cause of inspiring Canadian nationalism, Trump has threatened the country with a trade war over a Digital Services Tax.

Digital services are a recognition of a sweeping change in world commerce. Online services are now as important a revenue-generator as goods. This makes Trump’s tariff squabbles even more pointless, but he is being advised by old people who are pre-digital. I digress.

The tax affects revenues from online activities like virtual marketplaces, social media, and digital advertising. It focuses on large tech firms with global revenues exceeding $820m and Canadian revenues of more than $14.7-million.

The 3 percent tax is retroactive, meaning companies must pay on revenues going back to January 1, 2022.

Trump, presumably alerted by the CEOs whose revenues will be affected on June 30^th, blasted out his response: he would be “terminating ALL discussions on Trade with Canada, effective immediately” and would be levying new tariffs of his own on Canada within seven days.

This is just after he met PM Carney in Canada a few weeks ago, and could have discussed the matter then.

“They have charged our Farmers as much as 400% Tariffs, for years, on Dairy Products,” Trump said, apropos of nothing.

That has never happened. The tariff on American dairy products would only kick in if US exports exceeded a certain quota, which they never have. Also, American consumer protection standards are weak, having been written by the business elite, so Canadian quality controls are stricter. But to American businesses, you lose a few consumers, new ones get born…get over it, right?

Just keep the yachts afloat in Venice.

American digital service giants do pay that Digital Services Tax in many countries: France, the UK, Spain, Italy, and Austria imposed a similar tax, while Turkiye doubled it to 7%. Kenya, Indonesia and India have adopted similar measures. India has more than 450-million Amazon users monthly, though they contribute less than 7% to Amazon’s revenues. Google has 46.7-million monthly users in India.

Digital Services add up – but do not put a big strain on the corporations. They make a difference to the public purse, because tax money is available to upgrade digital service delivery, with new infrastructure and outreach.

But this is not a calculation that companies like to make. They assume their services will be magically made available to everyone. This is the philosophy of Jeff Bezos of Amazon, who runs a company that pays so little his workers have to use state healthcare funding. He himself is worth $237-billion. For the past 20 years, he has paid himself an annual salary of $80,000, because he “doesn’t feel good about taking more from the company”. Some years, he doesn’t pay income taxes at all, despite loaning himself billions - money that is not taxed.

Well, Jeff, now the nations of the world want to tax Amazon. And others.

The US fight against Australia is perhaps a forerunner of the Canadian brawl to come. A few years ago Australia had to back away from a Digital Services Tax. Trump said it was just a way to “plunder American companies” and threatened retaliation.

Time will tell whether Canada is going to stay the course, or back away like Australia did.

Trump is now threatening Europe as well, vowing to impose new tariffs of up to 50 percent on key European exports, including cars and steel, if a deal is not reached.

The EU has prepared a list of retaliatory tariffs worth up to $111.4-billion, which would target a broad range of US exports, from agricultural products to Boeing aircraft. EU leaders say they will defend the bloc’s tax sovereignty.

Their Canadian colleagues are taking a calm view.

Well, Canadian, eh?

One business leaders said "Negotiations go through peaks and valleys. With deadlines approaching, some last-minute surprises should be expected."

Bring on the rant, Donald, we’re used to it.

Carney has just announced retaliatory tariffs on US agricultural products, tighter bonds with the EU and Asian nations, and confirmed the Digital Services Tax.

So enjoy Canada Day, Donald, and have a poutine…

Thank you for following Barry’s Substack, focusing on the meaning behind the headlines. Each week a summary of a topical book helps full subscribers stay ahead of the conversation.

Next week will be The Self Made Myth, why progressive taxes are critical to change the way wealth is created, who creates it, and the role of government.

Recent features have delved into:

PS - If you have enjoyed this article, please consider buying me a TACO!