In this week’s edition, Prime Minister Mark Carney walks a political tightrope, reversing a controversial digital services tax under U.S. pressure, launching Canada’s first AI ministry to retain talent, and addressing calls to fix Canada’s fragmented life sciences strategy. Meanwhile, Canadian medical schools cut formal ties with U.S. oversight, raising questions about sovereignty and standards.
Canada Drops Digital Services Tax Amid U.S. Trade Threats
The federal government announced it would rescind its planned digital services tax following U.S. President Donald Trump’s abrupt suspension of trade talks and threats of steep retaliatory tariffs. Finance Minister François-Philippe Champagne confirmed the decision, with both countries now aiming to finalize a new deal by July 21, 2025.
Despite this, Prime Minister Mark Carney initially defended the tax, emphasizing Canada’s commitment to negotiations in its national interest. Trump also announced he would not extend the global tariff pause beyond July 9, warning that countries without deals will face tariffs as high as 50%.
Carney said his decision to rescind Canada’s digital services tax was “part of a bigger negotiation” with the United States, a move that led to the resumption of suspended trade talks. Critics saw the reversal as capitulation under pressure, while business groups and some former officials viewed it as a pragmatic reset in tense negotiations.
The White House declared that Carney had “caved” to President Donald Trump, with opposition leaders accusing him of making a last-minute concession under pressure with no concrete gains.
NDP Leader Don Davies called the decision “pure caving in to Trump and his billionaire friends,” accusing Carney of undermining Canadian sovereignty and backing down on fair taxation.
Before the federal government’s announcement to rescind the tax plan, Business Council of Canada President Goldy Hyder released a statement reiterating that the unilateral digital services tax has damaged Canada’s trade relationship with the U.S., as long feared. He urged the federal government to immediately propose eliminating the tax in exchange for the removal of U.S. tariffs to help resume negotiations.
Canadian Council of Innovators President Benjamin Bergen also criticized the digital service tax as ineffective, warning it acts as a pass-through cost to Canadians and exposes the country to harsh U.S. trade retaliation. He urged Ottawa to remain flexible in negotiations while emphasizing the need for stronger economic sovereignty.
University of Ottawa internet law professor Michael Geist similarly argued that Canada’s digital services tax predictably triggered U.S. trade retaliation, including Trump’s suspension of trade talks and tariff threats. He criticized Ottawa for ignoring years of warnings and failing to negotiate a broader agreement or delay the tax, despite repeated signals from both U.S. administrations and major tech companies that retaliation was likely.
Reports Urge Life Sciences Overhaul
Canada’s innovation edge faces new scrutiny as two separate reports warn of a funding and policy crisis in the life sciences sector. A report by Life Sciences Ontario and Shift Health titled “Catalyzing Ontario’s Life Sciences Economy,” urged immediate action to close funding gaps, revamp tax incentives, and matching private funds to foster the life sciences economy in the region. The report featured insights from key industry figures, including Dr. Maura Campbell and Dr. Mary Argent-Katwala, thereby enhancing its call to action with expert contributions.
In a separate report by the Public Policy Forum, a Research Money opinion piece highlighted that Canada is faced with a national health security emergency amid significant challenges in its life sciences sector, largely due to the shifting geopolitical landscape influenced by U.S. policies under the Trump administration. A emphasized the need for Canada to revamp its traditional approaches and urgently adopt new strategies to bolster its life sciences sector. It suggested six critical steps, including fast-tracking the Health Emergency Readiness Canada and adopting a “Made in Canada” approach to life sciences investment and procurement.
Canadian Medical Schools End U.S. Accreditation Partnership
The Canadian Medical Association (CMA) announced that, as of July 1, 2025, Canadian medical schools will formally end their joint accreditation with the U.S. Liaison Committee on Medical Education (LCME), ending decades of shared oversight.
CMA CEO Alex Munter said the move was driven by the need to insulate Canadian institutions from U.S. political interference, particularly following recent American rollbacks on diversity standards. The shift will allow Canadian schools to develop medical education that is more responsive to local needs and values, reinforcing national autonomy in healthcare.
Canada Launches AI Ministry to Retain Talent and Boost Innovation
An article in The Future Economy discusses how Canada has launched its first dedicated artificial intelligence ministry under Prime Minister Mark Carney, with Evan Solomon at the helm, to solidify its global leadership in AI innovation by capitalizing on its legacy and reversing the trend of losing talent to international tech hubs.
Despite its early breakthroughs, Canada has struggled to monetize its AI breakthrough effectively, often losing talent to Silicon Valley and other international tech hubs.
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