Trump's 'revenge tax' on other countries could hit U.S.

Elizabeth Thompson · CBC News

· Posted: Jun 26, 2025 4:00 AM EDT | Last Updated: 9 minutes ago

A arguable taxation being projected by President Donald Trump's medication that could outgo Canadians and Canadian businesses billions is besides apt to outgo the U.S. government, according to an appraisal by a non-partisan U.S. legislature office.

It is besides apt to outgo American companies by prompting investors from countries deed with the taxation to move investments retired of the U.S, according to the assessment.

Dubbed the "revenge tax," Section 899 of Trump's One Big Beautiful Bill Act calls for a caller withholding taxation to beryllium imposed on concern income paid retired by American companies to investors who unrecorded successful countries the U.S. authorities considers to person unfair oregon discriminatory taxes.

Canada's integer services tax, which hits companies similar Amazon, Google, Meta, Uber and Airbnb with a taxation connected gross from Canadian users, is among the taxes the U.S. considers discriminatory.

Top Canadian officials admit privately that they are acrophobic by the imaginable of Trump's caller withholding taxation and are intimately watching what is happening successful Washington — arsenic are Canadian investors, companies, concern advisors and taxation lawyers.

Digital services taxation successful crosshairs

Federal Finance Minister François-Philippe Champagne says he's lasting by the taxation — which has its archetypal large outgo owed June 30.

"The DST is successful unit and it's going to beryllium applied," helium told reporters connected Parliament Hill past week.

Two antithetic versions of Section 899 are presently earlier Congress, but some versions hazard hitting Canadians and Canadian companies with a caller withholding tax.

The mentation adopted by the House of Representatives would instrumentality effect rapidly and enforce a five per cent withholding taxation connected things similar dividends to Canadians from U.S. companies, adding different 5 per cent each twelvemonth to a maximum of 20 per cent.

An amendment to that section, presently earlier the Senate, would hold the taxation until 2027 and would apical it retired astatine 15 per cent. The Senate has not yet voted connected the bill, though it is being pressured by Trump to o.k. the authorities by July 4, the U.S. nationalist holiday.

A survey of Section 899 by the U.S. Congress's non-partisan Joint Committee connected Taxation (JCT), which performs a relation akin to Canada's Office of the Parliamentary Budget Officer, predicts that the caller taxation would initially bring billions into the U.S. Treasury. However, it besides predicts those revenues would past commencement to diminution — and that by 2033 oregon 2034 it would really pb to a driblet successful revenue.

The mentation of Section 899 adopted by the House of Representatives is expected to rake successful an estimated $116.3 cardinal US betwixt 2025 and 2034 for the U.S. Treasury, with $12.5 cardinal US successful 2026 rising to $28.7 cardinal US successful 2027 and $31.8 cardinal US successful 2028.

However, the investigation projects that revenues would past commencement to decline. By 2033, the withholding taxation is projected to outgo the U.S. Treasury $4.8 cardinal US successful mislaid gross and, by 2034, $8.1 cardinal US.

The amended mentation of Section 899 is projected to bring successful lone $52.2 cardinal US betwixt 2025 and 2034. But by 2034 it excessively would outgo the U.S. authorities $2.5 cardinal US successful mislaid revenue.

A root acquainted with the JCT's enactment said its investigation assumes that the U.S. gross nationalist merchandise volition stay fixed and overseas laws, similar the DST, volition not change. What it assumes volition change, however, is the behaviour of individuals and companies to debar the withholding tax.

The JCT projects that the simplification successful request for nonstop and portfolio concern connected the portion of overseas investors volition trim the worth of U.S. assets. In turn, that driblet successful worth volition pb to a nonaccomplishment successful taxation gross for the U.S. Treasury.

David Macdonald, elder economist with the Canadian Centre for Policy Alternatives, said the JCT's investigation makes a precise large presumption — that countries similar Canada won't deed backmost astatine the U.S. with their ain retaliatory taxes.

He said the ongoing commercialized war has shown that Canada is willing to deed back.

Should Canada retaliate, Macdonald said the U.S. is much exposed than Canada connected the taxation beforehand due to the fact that a batch of American companies run here.

"They marque a batch much profits successful Canada than Canadian companies marque successful profits operating successful the U.S.," Macdonald said.

Macdonald agreed with the JCT's appraisal that the withholding taxation could punctual an exodus of concern successful U.S. securities, predicting that galore companies are astir apt already figuring retired ways to hedge their investments.

He said this is atrocious for concern and risks damaging the economies of some countries.

"Nobody wins a commercialized warfare and cipher wins a taxation war," said Macdonald.