Ottawa’s controversial Online Streaming Act is facing a major trade backlash as U.S. lawmakers move to retaliate against what they call “discriminatory” digital laws. Experts have warned for years that forcing foreign streaming services to pay into Canadian content funds while banning them from the benefits would trigger a response from Washington.
While the federal government and cultural lobby groups previously dismissed these concerns—claiming the CUSMA “cultural exemption” would act as a shield, the bill has now come due. House Republicans recently introduced the Protecting American Streaming and Innovation Act, which mandates an investigation into the Canadian law and opens the door for huge trade penalties.
The bill, led by Representative Lloyd Smucker, describes the Canadian law as a “revenue-based tax that targets American companies.” It argues that the current “cultural industry” definition is a “legacy” concept that shouldn’t apply to modern digital delivery.
If the U.S. Trade Representative finds the act unreasonable, Canada would have 180 days to fix it or face the suspension of trade benefits and new duties on Canadian goods like dairy, lumber, or steel, which would make the ongoing trade war even messier.
Ottawa law professor and policy expert Michael Geist, who has tracked the issue since 2020, notes that this was an avoidable strategic error. He suggests that instead of treating global streamers as “policy ATMs,” Canada needs a realistic, non-discriminatory framework.
“The Online Streaming Act was always risky policy and now it appears the entire statute is in jeopardy,” said Geist. Ottawa passed the act in 2024.
The U.S. has already pinpointed the Online Streaming Act as a headline issue for the CUSMA joint review scheduled for July 1 of this year. This follows a similar pattern seen with Canada’s digital services tax, where the government eventually caved to U.S. pressure after years of insisting it could avoid retaliation.
“The government talks tough, dismisses warnings of retaliation, and scrambles for an exit when consequences arrive,” Geist noted. Ouch.
The proposed U.S. law serves as a “ready-made blueprint” for the Trump administration to deploy tariffs. It also sends a message to other countries like Australia and Brazil that Canada is being used as a test case for global enforcement against similar streaming regulations.
It’s pretty simple. If foreign streamers like Netflix, Amazon, Apple and Spotify for example, are forced to pay millions towards Canadian content, this tax will likely be passed onto consumers. Time to fire up that roof top TV antenna again, folks.
Last fall, the CRTC said it could reverse course if streaming companies win their legal battle against the Online Streaming Act.
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