The measure “appears to breach Canada’s commitments under the USMCA” because it seems to target U.S. firms and favour Canadian ones, U.S. Trade Representative Katherine Tai’s office said in its formal request for talks. (The Logic)

Talking point: The request for dispute settlement consultations starts a clock for further action under the trade deal; if the two countries can’t reach a deal in 75 days, the U.S. can ask for a panel to make a ruling. The process could ultimately allow the U.S. to impose retaliatory tariffs. The Liberal government enacted the digital services tax on large technology firms in June. The U.S. has frequently expressed its opposition to Canada’s digital services tax, which Tai repeated in a meeting with Trade Minister Mary Ng on Wednesday. Ottawa says the measure is a necessary stopgap until OECD-led negotiations produce a new way to tax multinationals. On Friday, Finance Minister Chrystia Freeland said it’s still committed to that plan. “The use of the new NAFTA is an appropriate forum to allow for further dialogue” on the tax issue, she said.