The pressure from the U.S. on the Carney government to drop the Liberals’ controversial Online Streaming Act just got even more forceful.

Last week, Representative Lloyd Smucker, a Republican from Pennsylvania, introduced legislation co-sponsored by several other Republicans in the House of Representatives, that would direct the U.S. Trade Representative’s Office to launch an investigation into the Online Streaming Act, passed by the Trudeau government in 2023.

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Republican lawmakers want the USTR to determine if the Liberal government’s legislation constitutes an unfair trading practice targeting U.S. businesses, which would be a pretext for allowing the Trump administration to impose higher tariffs on Canada. USTR Jamieson Greer has long pointed to the Online Streaming Act as one of the primary impediments to a renewed trade deal between Canada and the U.S.

The Online Streaming Act would force streaming companies like Netflix, Amazon Prime and Disney Plus to provide 5% of their streaming revenue earned in Canada to the Canadian government, which the feds would then send to specific local media funds.

It also forces those streaming providers to follow Canadian content rules, meaning online streaming services would be required, under the legislation, to push a minimum amount of Canadian content on viewers or risk losing their ability to operate in Canada.

The U.S. has long complained this legislation unfairly targets U.S. companies, as the large streaming providers that operate here in Canada are American corporations.

“Digital trade plays a critical role in America’s economy, supporting high-paying jobs and exporting American values,” said Smucker. “Canada’s unfair policies stack the deck against U.S. companies, creators, and workers.”

“This bill would protect American creators and companies,” Smucker added.

The last thing Canada needs right now is a pretext for the Trump administration to impose a new round of punishing tariffs on the Canadian economy or risk the re-negotiation of the CUSMA. Media reports already suggest Canada is lagging behind Mexico in its negotiations with the U.S. Complaints about the Online Streaming Act actually date all the way back to the Biden administration, meaning U.S. opposition to the legislation is bipartisan.

The reality is the Online Streaming Act isn’t just bad news for U.S. streaming giants. It’s also bad news for consumers.

Corporations don’t just take additional costs lying down. If streaming giants suddenly have to pay 5% of their revenue earned in Canada to the federal government, you can bet dollars to donuts that costs for Canadian streamers will increase as a result. Large companies don’t just eat extra costs: they pass those costs on to consumers.

The other thing consumers should be worried about is streaming giants leaving the Canadian marketplace altogether.

There are already streaming providers, like Hulu, that deliberately aren’t in the Canadian market, likely because of pre-existing overregulation. New Canadian content rules and taxes certainly won’t make the Canadian market more attractive to those that don’t yet operate here. And they could very well drive one or more companies that are already operating in Canada to leave, deciding the costs of operating in the Canadian market aren’t worth the benefits.

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Last June, U.S. President Donald Trump threatened to cut off all trade negotiations with Canada unless the Carney government repealed the Digital Service Tax, which also primarily targeted American corporations. Prime Minister Mark Carney relented just days before the tax was first supposed to be collected and the Liberal government repealed one of its signature pieces of legislation.

Carney ought to do the same thing here. The Online Streaming Act is clearly serving as a major trade irritant in relations with the U.S. and it also threatens to raise costs and limit choice for consumers.

The right thing for the feds to do is scrap this controversial legislation, which is yet another relic of the Trudeau era. Doing so would both be a boon for Canada-U.S. relations and a major win for consumers.

Jay Goldberg is the Canadian Affairs Manager at the Consumer Choice Center

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