Wanderings – When did ‘elbows up’ mean give away?

In the span of a weekend, Canada went from a David among nations, fighting the Goliath (United States) over trade – to surrendering a negotiating position based on the tantrums of an adult-sized toddler.

In 2024, the Canadian government passed a digital services tax. This act taxed the profits of international online companies that operated in Canada based on their revenues from Canadian users. Online companies that made over $20 million per year from Canadians would be taxed at three per cent of their Canadian revenues. The Parliamentary Budget Officer said this would amount to about $7 billion in new revenue over five years.

This tax targets companies like Amazon, Netflix, Disney+ and others, and frankly it makes a lot of sense. If bricks-and-mortar retailers have to pay Canadian taxes, why shouldn’t the online retailers that are trying to put them out of business do so as well?

Even though this act has been legislation for a year and was about to go into effect June 30, U.S. President Donald Trump threw a tantrum online and on Fox News, resorting to his usual tactics of baseless accusations and bush-league name calling. In the end, he put a stop to current U.S./Canada trade talks.

All the pundits said this was a negotiating tactic. That Canadian Prime Minister Mark Carney could and likely would use this as a bargaining chip to get tariffs off Canadian steel and aluminum. You don’t give up an important trading position without getting something in return. Except in Carney’s case – he did.

Late Sunday, the Prime Minister’s Office released a statement saying that the online tax was being rescinded in order to restart trade talks. A concession that should never have been given.

Since his inauguration in January, Trump has bellowed and brayed about the “unfair” deal the U.S. receives in Canada. Americans have paid for this with his tariffs taxing them for products from Canada, and vastly declining tourism from Canadians. Trump has created global upheaval to international trade – the likes of which we have never seen before. Simply put, Trump is a bully. Carney caving on the digital tax is akin to a kid getting a wedgy and asking for another one.

Now that one negotiating standpoint has been obliterated, how long will it be until the remaining trade issues will be capitulated on?

If this was a one-off capitulation, there is little harm to Canadians. The digital tax would have likely increased the subscription rates of the U.S.-based online companies as those firms would not eat that tax. And the federal government was not counting on the revenue from this tax, because there has never been this form of tax before in Canada. The fear is though, that this is only the first of what could be many capitulations by Carney in dealing with Trump.

Canadian businesses are slumping due to existing U.S. tariffs. Damage to the automotive sector is impacting jobs in Ontario. The agriculture industry is hurting with tariffs against canola and other crops. The oil, energy, and forestry sectors are also in dire need of relief from U.S. tariffs. Relief should not, and can not, come from caving into the trade demands of a bully. Carney needs to work to get the best deal for Canada, and not worry about reaching a deal by a very specific deadline at all costs.

Elbows up means to protect yourself on the ice – it does not mean to give up, or accept a bad deal. To get the best trade deal possible, you have to be willing to walk away. Giving in so quickly is the opposite of that.

This column was originally published in the July 2, 2025 print edition of the Morrisburg Leader.