By Paul Vieira

OTTAWA--Canada's broadcast regulator will slap a levy on Google starting April 1 to help finance enforcement costs, a move that trade, telecom, and internet-law experts warn risks exacerbating heightened trade tensions between the Trump administration and Ottawa.

The Canadian Radio-television and Telecommunications Commission said Wednesday that Google, a unit of Alphabet, would be charged a fee to recover regulatory costs related to Canada's online-news law. That legislation compels digital platforms like Google and Meta Platforms--owner of Facebook and Instagram--to compensate media outlets for news links posted on their platforms. In response, Meta blocked Canadian news links from its platforms.

In a submission to the regulator, Google said it should be exempt because it reached a voluntary agreement with domestic media owners to make annual contributions. Because of this deal, the regulator wouldn't need to oversee mandatory bargaining between Google and the news businesses. Google also said "it is not a rational approach to ask any one company to bear 100% of the costs of a regulation imposed on them."

The regulator, however, is pressing ahead with the levy--at a time when President Trump has singled out Canada and other countries for unfair treatment of U.S. companies. As a result, Trump has pledged to introduce reciprocal tariffs to change other countries' behavior. Among the measures the White House plans to target is Canada's application of a 3% digital-services tax, which the Biden administration had previously warned the Liberal government it needed to scrap or else face U.S. retaliation.

"This new 'Google tax' seems like waving a red flag in front of a bull given the daily tariff threats from President Trump," said Mark Warner, a Toronto trade lawyer who practices in both Canada and the U.S. Warner added that Trump has mused about using sections of the Internal Revenue Code to double the taxes faced by foreign corporations and individuals whose countries subject U.S. citizens or corporations "to discriminatory or extraterritorial taxes."

Besides reciprocal tariffs, Canada faces a possible 25% U.S. tariff on nonenergy imports, and a 10% duty on U.S.-bound energy products. Those hefty tariffs could kick next week, on March 4, conditional on efforts by Ottawa to fortify border security and deter fentanyl trafficking.

"Why did CRTC choose to release it today when, presumably, government officials are doing everything they can to remove irritants?," said Mark Goldberg, who runs his own telecom consultancy in suburban Toronto. "This isn't going to ease cross-border tensions."

A spokesman for the regulator referred questions about the timing of the levy and the potential effects on U.S.-Canada trade to Canada's foreign department. A spokesman for the foreign department didn't immediately respond to a request for comment.

Business groups, such as the Canadian Chamber of Commerce, have argued that the Canadian government has failed to heed warnings about the effect levies on the U.S.'s biggest technology companies could have on cross-border trade.

Michael Geist, a University of Ottawa professor with an expertise in online law, said officials had designed online-news regulations with an eye toward big digital platforms paying regulatory costs. That was done prior to Trump winning a second term, and Geist said the president's policy thrust on trade makes the regulatory fee a risky venture.

Canada "wants U.S. companies to pay for Canadian news and then also pay for the system of figuring out how to do it. The fact that only one company is subject to the law makes this a particularly bad look," said Geist, referring to Meta's absence.

Write to Paul Vieira at paul.vieira@wsj.com

(END) Dow Jones Newswires

February 26, 2025 18:54 ET (23:54 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.