Canada and Mexico Want US Billions, but Also a Fight
30th June 2025
We’ve been in disagreements on trade and other issues about the border with both of them recently. But here’s what’s happened. Given all this contention, you would think that Mexican President Claudia Sheinbaum and Prime Minister Mark Carney in Canada would want to cool passion. But that’s not what happened.
Recently, Canada decided that they were going to enforce the digital services tax. That was something that was passed but not enforced yet. And what it was is a 3% tax on our tech companies—Amazon, Apple, Meta, Google—by anybody in Canada who uses their service.
You buy something online, you buy an ad, you pay a fee to any of these and you’re Canadian, then you’re going to pay 3%—you’re going to have to have a 3% tax for the use of Canadian consumers. And they don’t even have to be in Canada. They can be in the United States. So, they’re going to charge them 3%.
And this is the killer. They’re going to enforce the law all the way back to 2022. So, all of a sudden next month, our tech companies—not that I worry about their financial situation. There’s $9 trillion of market capitalization in Silicon Valley. But the idea that they’re going to be gouged for $2 or $3 billion right in the middle of these heated discussions.
And what are those heated discussions? Canada has $63 billion in trade surpluses with us. That’s one backdrop. They have an unenforced border. As we close the southern border, some of the influxes of drugs and illegal aliens started to come northward. And of course, they pay 1.37% of gross domestic product in NATO contributions.
So, given that all those are contentious issues, why would the Canadians now create a new tax? I know they passed it a while back, but why would they start enforcing it right now and try to rub our noses in it? It makes no sense.
The same thing is true of Mexico. There’s about $1.5 trillion of total trade between Mexico, the United States, and Canada. And if you look at it, most of that growth and wealth is in the United States.