The Liberal decision to axe the digital services tax (DST) on large tech companies, set to go into effect today (June 30), is important not so much on its own terms, but what its elimination tells us about Prime Minister Mark Carney’s US strategy.

In a nutshell: Nothing good, if you’re interested in preserving Canadian independence.

Without getting into the tax itself too much, it was very much a mainstream policy, and a sound idea: make transnational tech companies that have a nasty habit of avoiding taxes in the jurisdictions in which they operate actually pay their way. It’s been the subject of negotiations at the Organization of Economic Cooperation and Development (OECD). Versions of it have been adopted in countries such as the United Kingdom, Spain and Italy.

It was also caught up in global politics, with the US playing a decidedly two-faced role in stymieing its adoption. Before Trump, the US was highly unlikely to ratify any agreement, which requires a two-thirds majority in the Senate, making opponents’ arguments that Canada should’ve waited for a global compromise more than a little self-serving. Trump’s re-election sealed the (non-)deal. But Canada moved forward. US tech companies despised the DST and were planning to attack it via the United States Mexico Canada Agreement (USMCA) renegotiations scheduled for 2026.

Then on June 19 the Liberal government made a big show that they were going to implement it on schedule, Trump walked away from talks between Canada and the US on a comprehensive trade and security agreement because of it, and here we are.

What matters most isn’t the policy itself – though you’d think a government that wants to increase defence spending by anywhere from $50 to $90 billion would be interested in securing every revenue source it could – but what it tells us about Carney’s overall US strategy.

Mark Carney has been personally negotiating a “comprehensive” trade and security deal with the US; only in late June did he hand off this responsibility to Canada’s ambassador to the US. According to a press release issued Sunday night(!), the Carney government cancelled the DST “to advance broader trade negotiations with the United States.”

Normally, such a move might not be a big deal; in normal negotiations, countries give and take. And it sure seemed like the government was setting up the DST to be a sacrificial lamb. (My working assumption for months has been that Carney, drawn to the rough physicality of pipelines and militaries, sees Canadian digital policy, outside of a fixation on AI, as wholly expendable. I fully expect future online harms legislation and the Online News Act to meet a fate similar to that of the DST.)

But these are not normal negotiations, and Trump is not a normal trading partner.

Start with Carney’s long-stated goal, from the Sunday press release announcing the end of the DST: “a new economic and security partnership with the United States.”

He’s not proposing a UK-style lightweight tariff deal, but a reworking of the entire Canada-US relationship, including security. If words uttered by Carney have any meaning, comprehensive means comprehensive. It requires deeper integration.

And he’s set a deadline of July 21 to do so. Already, he’s sacrificed a domestic policy simply to keep the talks going. And he’s done so while also claiming that Trump no longer wants to annex Canada, only to be contradicted by Trump himself days later.

These are not the actions of someone who is simply stringing the US alone. They’re the actions of someone seeking to address the problems in Canada-US relations through deeper integration.

The unilateral setting of an arbitrary deadline to conclude the talks is particularly odd. Deadlines only work to spur negotiations if both parties share the urgency (they don’t) or if one has the ability to impose its will on the other (Canada doesn’t). So why the deadline?

Then there’s the most-obvious problem. Donald Trump is an unreliable negotiating partner who has proven time and again, in politics and business, that he will renege on any agreement if he feels that doing so will work to his advantage. The greatest irony of Carney’s talks is that they’re in response to Trump’s tariffs, tariffs that are illegal under the actual agreement governing North American economic relations, which was negotiated by Trump himself. A treaty that is up for re-negotiation next year. Is Carney’s new agreement, being done as far as I can tell on the fly, supposed to replace the USMCA? Or are we going to simply do this all again next year?

It all comes down to: we have no reason to trust the word of the United States, and yet Carney is acting as if we can.

Mark Carney is negotiating a far-reaching economic and security agreement outside of the current treaty framework, with a president who cannot be trusted to keep his word, and thus who cannot deliver the certainty that Carney wants. In pursuit of this unachievable goal, Carney has demonstrated that he is willing to limit Canadian policy autonomy without any indication of where he would stop or what policies are off limits.

Deeper integration is the plan

A lot of people who voted for Carney want to believe that he’s playing some kind of long game, that he’s stringing the United States along until… something?

It’s time we started analyzing Carney’s plans as they are, not as we wish they were.

Carney is spending a lot of time and hard-earned political capital keeping alive the possibility of a comprehensive trade and security agreement with the US. He’s remained stone-cold silent on Canadians being harassed at the border and detained by ICE. The US military is in talks with Canadian miners for key minerals. He’s said nothing about how Canada will respond to the evisceration of US standards and regulatory setting, processes upon which all Canadians, and Canadian businesses depend. It would require more, not less, government regulatory capacity. Instead, Carney is cutting taxes and wants to cap the size of the civil service.

Carney has been utterly consistent in his desire for a comprehensive trade and security agreement with the United States. Even at the height of his elbows-up rhetoric, it was always part of his platform, pitched as part of his diversification plan, of needing a new arrangement for Canada. Maybe we should start taking him at his word.

These negotiations never made any sense as a diversification strategy. By definition any comprehensive agreement would entail creating many more new connections and dependencies. And again, almost by definition, these new dependencies, including in security and defence, will make it that much more difficult to meaningfully distance Canada from the United States.

Understanding Carney: Economic blinders, ignoring authoritarianism

All signs suggest that Carney has badly misread the nature of the US threat, and that Canadians in turn have misread Carney on this central issue.

Carney has repeatedly said that Canada will never be the 51^st state, but there’s more than one way to hollow out a country’s sovereignty. Sacrificing domestic policies in pursuit of a treaty that binds only one partner is one way to that goal.

Everything Carney has done indicates that he sees the Trump threat in purely economic terms. Trump, in this view, is dangerous because he’s erratic and has glommed on to an absurd, dangerous economic policy that threatens the viability of the Canadian economy. In such a scenario, the goal is to reduce or eliminate the tariff barriers while seeking to diversify as much as possible the domestic Canadian economy.

From this perspective, Carney’s actions make perfect sense. He’s trying to minimize the erratic Trump problem in the hope that economic sanity will one day return to the US, while implementing bog-standard conservative domestic economic policies (lower taxes! Less government! Pipelines! Defence spending! Natural resources!). It’s the kind of analysis you’d expect from someone who had spent their entire lives existing at the very centre of mainstream economic thought and focused only on maximizing or minimizing a few economic variables – inflation, portfolio returns, GDP.

It’s true that Trump is erratic and his tariff policies are bananas. But Carney’s mistaken the symptoms for the disease.

The real danger to Canada is that Trump is an autocrat, a fascist, who is dragging the United States into despotism. He has shattered North American governance’s underlying foundation. The rule of law no longer holds. Instead, power carries the day. The tariffs are the symptom. That Trump would impose them in the first place: that’s the important change.

The United States, and by extension, North America, are no longer what they were, and they’re not coming back. Even 20 years ago, integrationists could credibly argue that we’d be getting closer to a liberal-democratic US that (mostly) respected the rule of the law and (mostly) shared our values. That is no longer the case. The United States under Republican rule seeks not cooperation but domination. Any comprehensive agreements would reflect this changed status. The absolute best we can hope for is severe instability, as successive Republic and Democratic presidents void their predecessors’ policies; the worst is despotism and civil war. Again, this is the fundamental sea change.

Mark Carney, in surrendering the DSA, has jeopardized Canadian policy autonomy, all in the pursuit of the fantasy of a binding agreement.

Mark Carney may want secure access to the US market and for tariffs to go away. But neither of these are on the table because you can’t have certainty when dealing with a country that doesn’t respect the rule of law or other countries’ sovereignty.

And until he realizes this, he will continue to puff and posture and give away the store in pursuit of a fantasy.

Responding to this crisis requires a wartime-level effort, not just to buy more guns, but to wean our military from US influence, our networks from US software vulnerabilities. It requires governance changes. None of which Carney has shown the slightest interest in.

It requires the exact opposite of what Carney is doing in Canada-US relations. Without domestic policy autonomy, sovereignty is meaningless.

Canada will continue to have relations with the United States. We will still have to deal with issues as they come up. That’s always been part of the job. But we need to do so with the full understanding of who we’re dealing with, and what’s possible, should we want to maintain our independence.

That starts with ending comprehensive trade negotiations and getting serious about policies that will actually promote Canadian sovereignty.