Dear Chamber Network,
For your review, please see below an update on two key recent Canada-U.S trade issues: 1) restarted Canada-US trade talks, and 2) major developments related to the One Big Beautiful Bill Act.
While addressing U.S. tariffs continues to be the immediate priority for many businesses, members should also remain focused on these key issues on the horizon that will have implications for Canadian businesses.
1) Canada-U.S. trade talks resume, DST removed
On Friday, June 26, President Trump announced via Truth Social the suspension of “ALL discussions on trade” between Canada and the U.S. in response to Canada’s Digital Services Tax (DST), and that a new tariff rate for Canada will be announced within seven days. President Trump also refers to protections for Canada’s dairy products, although the main stated reason for suspension of trade talks was the DST. Late in the evening on Sunday, June 29, Canada announced that it would be repealing the DST and that bilateral talks would resume with the goal of a deal being reached by July 21.
The Canadian Chamber’s statement on the removal of the DST and resumption of bilateral talks can be viewed here. The Canadian Chamber has been consistent in opposing Canada’s DST since its inception. You can view our June 12 joint letter to PM Carney here. In recent weeks, we have also been very active on this issue in the media (e.g. Globe and Mail, Politico, Financial Post, CBC, etc.).The Canadian Chamber team will be closely following developments and will be engaging the government on the resumed trade talks.
Additionally, in anticipation of the U.S. government’s forthcoming domestic consultation on CUSMA, the Canadian Chamber will gather input on major CUSMA review priorities in the coming days. For your awareness, you can review the Chamber’s submission to the government of Canada’s October 2024 consultation here.
2) The One Big Beautiful Bill and its implications for Canadian businesses
On May 22, the U.S. House of Representatives passed the One Big Beautiful Bill Act (OBBBA), a major budget reconciliation bill that seeks to advance the President’s economic and social agenda. The OBBBA then moved to the Senate for consideration, where Senate Majority Leader John Thune set a goal of passing the Senate version of the OBBBA by July 4. Although there has been some skepticism that the OBBBA will be passed by this self-imposed deadline, since returning from the NATO Summit, President Trump has refocused his attention on the OBBBA and strongly reiterated his call for the Bill to be passed by July 4. The latest version of the OBBBA text can be viewed here.
There are key aspects of the OBBBA that members should be aware of:
- Modifications to major tax credits. The OBBBA eliminates or modifies many advanced manufacturing and clean energy tax credits (e.g. Advanced Manufacturing Production Credit, Third Party Sales of Eligible Credits, etc.), and introduces major new incentives for U.S. domestic manufacturing. The Act will significantly affect the U.S. renewable energy industry and adversely affect the ability to develop and finance various renewable energy projects. This could have second order effects for Canadian businesses within impacted supply chains. You can view a summary of the OBBBA’s various tax provisions here.
- Section 899 (“revenge tax”) dropped. On June 26, Secretary Bessent announced the removal of Section 899 from the OBBBA, and that the G7 countries have agreed to exempt the U.S. from applying a 15 percent minimum corporate tax rate. The G7 statement can be viewed here. The removal of Section 899 is a major win for Canadian businesses. The provision would have imposed punitive U.S. withholding taxes on countries with digital services taxes, like Canada. The Chamber had been very active on Section 899, including in our advocacy with policy makers in Washington D.C.
If any elements of the OBBBA—including proposed changes to tax credits or other measures—raise concerns for your business, we encourage you to share your input. Your feedback will help inform the Canadian Chamber’s position on the OBBBA and will ensure your priorities are reflected in our ongoing advocacy with Canadian and U.S. policy makers.
