Good morning. The federal government is aiming to get all of the U.S. tariffs lifted as part of a deal later this month, Ottawa’s ambassador in Washington said yesterday. Below, we look at what leverage Canada has left after scrapping its digital services tax.

Energy: A ship has left B.C. for Asia with the first load of liquefied natural gas from the new LNG Canada terminal, ushering a new era in energy exports at a time when Canada seeks to diversify markets away from the United States.

Trade: The appetite to buy Canadian is fizzling across some sectors but remains strong when it comes to wholesale, groceries, food, travel and alcohol.

Money laundering: Businesses associated with the adult entertainment industry are using Canadian payment service providers to transfer money overseas and circumvent sanctions imposed against Russia by Western countries, according to a financial intelligence report.

Feuds: Trump and Musk are at it again. You can click through to the story but this A+ opening sentence pretty much covers it: “Elon Musk may find out what happens when DOGE bites man.”

• Canada’s S&P Global Manufacturing Purchasing Managers’ Index offers a snapshot of the economy’s strength in June.
• The EU’s trade commissioner is travelling to Washington with a plan to push back on U.S. tariffs.

Prime Minister Mark Carney’s last-minute cancellation of a long-controversial tax might have brought U.S. President Donald Trump back to the table. But by tossing in one of his only clear bargaining chips, the Prime Minister now enters the next 20 days of negotiations (and likely far beyond) with limited leverage – and a long list of U.S. demands to contend with.

Canada is “very nasty to deal with” over a host of issues, Trump said in a recent interview. He complained about the country’s supply-managed dairy system, which he says unfairly blocks U.S. farmers; softwood lumber, where he says Canadian producers benefit from subsidies; and digital policy, particularly the taxes and regulations that affect major U.S. tech firms.

He has also frequently accused Canada of taking advantage of the U.S. through “one-sided” trade deals and regulatory barriers – irritants he first raised during NAFTA renegotiations and has revived heading into this round of talks.

With the digital services tax off the table, Canada has given up billions in retroactive payments but potentially staved off a far steeper punishment through tariffs.

At least, that must be Carney’s hope. But it’s hard to look at Trump’s list of objections without wondering how forcefully Canada can fight back on any of them.

The country faces multiple pressures from the U.S. in the tech sphere alone — over its Online Streaming Act, which requires foreign platforms to fund Canadian content; and its Online News Act, which compels large platforms to compensate news publishers. U.S. business groups warn both laws could inflame trade tensions.

It might have been useful to offer U.S. dairy farmers more access to Canada, but Parliament just doubled down on protecting its strict controls over imports. Before breaking for summer, it approved the Bloc Québécois’s Bill C-202, which hamstrings the government’s ability to make concessions related to the existing tariffs or quotas in any trade negotiations.

This is where giving up the DST chip forces another uncomfortable truth into focus: The digital services tax was, in a sense, a mirror held up to an industry Canada doesn’t have – a policy aimed at platforms the country relies on but has no domestic equivalent for.

That isn’t to say Canada was necessarily wrong to tax these companies, as historian Taylor C. Noakes writes. (Columnist Robyn Urback argues otherwise. ) Regardless, a little self-reflection might be in order. “Instead of beginning with the question of how to tax this new economy,” Lachlan Wolfers, a tax partner at KPMG Canada, told The Globe. “it would serve Canada better to consider how it can promote investment and productivity gains in technology domestically, so it can see better tax revenues as an outcome.”

Canada structured the DST to apply only to very large firms with global revenues over $1-billion and Canadian digital revenues over $20-million – thresholds that effectively excluded nearly all Canadian tech firms.

It might be unreasonable to expect Canada to have a homegrown platform with the scale or market power to be subject to a measure like this anytime soon, but the distinction between taxing the new digital economy and participating in it remains a revealing measure of the position the country now finds itself.

Neither is it an especially strong one at the negotiating table. Early last month, Carney lifted the retaliatory tariffs put in place by his predecessor, citing domestic pressures on inflation and supply.

Having already dropped the tax on U.S. tech giants, he may have little left to counter Trump but to restore the ones Canadians pay.

A global trade war. A war in Ukraine. Increased tensions between Israel and Iran.