The One Big Beautiful Bill, recently passed by a narrow vote in the U.S. House of Representatives, now heads to the Senate where it could become law as early as July 4th. Buried within its 1,100 pages is Section 899, a retaliatory tax measure that would override key provisions of the Canada-U.S. tax treaty. It was crafted in response to Canada’s Digital Services Tax (DST), and if passed, it would impose escalating withholding taxes on Canadians who hold U.S. securities—jeopardizing retirement savings for millions. Canadian policymakers have a short window to act before this legislation is finalized in Washington.

The inclusion of Section 899 is deeply troubling for Canadian investors—particularly for older Canadians who have responsibly saved for retirement through RRSPs, RRIFs, and pension plans like the CPP, many of which are heavily invested in U.S. markets.

Members of the Canadian Association of Retired Persons (CARP) will be rightfully concerned about the potential ramifications of Section 899 on Canadian retirees and investors. The proposed tax increases could undermine the financial security of older Canadians who rely on income from U.S. investments.

It’s clear that powerful American interests—particularly in the tech sector—have flexed their political muscle in shaping this legislation. Canada must now respond with equivalent resolve and clarity. Prime Minister Mark Carney, with the bona fides he brings to his new role, should be well-positioned to do just that.

While the goal of tax fairness is laudable, it cannot come at the cost of severe and disproportionate penalties for ordinary Canadians. Raising withholding taxes on Canadian-owned U.S. securities—potentially up to 50%—puts retirement savings at risk and destabilizes decades of cross-border investment planning.

The U.S. bill also threatens to override core elements of the Canada-U.S. tax treaty that have stood since 1942, jeopardizing not only private portfolios but also institutional investors such as the Canada Pension Plan Investment Board.

CARP calls on the federal government to:

• Immediately engage with U.S. counterparts to make the case that Section 899 is not only punitive but economically reckless—hurting retirees, pensioners, and savers who had no part in the policy dispute.

• Publicly affirm its commitment to protecting Canadians’ retirement security and stable cross-border investment relations.

• Ensure full transparency for Canadians with U.S. holdings—by clarifying which savings vehicles are at risk and what the government is doing to protect them.

• Prepare to re-evaluate the DST if it becomes clear that the consequences of this policy disproportionately hurt Canadian savers and retirees. Tax fairness must not come at the cost of economic self-harm.

Canada will need to bring this grievance—alongside other Trump-era issues around tariffs, trade access, and economic fairness—to the negotiating table with renewed urgency. This unfolding dispute underscores the importance of principled but pragmatic diplomacy.

Advice to Canadian Investors: Stay Informed, Not Alarmed

While the proposed changes are concerning, now is not the time for panic selling. Sudden financial decisions could lock in losses or disrupt long-term planning. CARP urges all Canadians with U.S. holdings to speak to a trusted financial advisor, stay up to date on developments, and ensure their portfolios are positioned with resilience in mind.

CARP will continue to speak out on behalf of older Canadians and push for decisive action that puts their financial security first. We will be watching closely as the bill advances through the U.S. Senate and will be pressing the Canadian government for timely updates and action.

See Coverage in Globe and Mail from Clare O’Hara: https://www.theglobeandmail.com/business/article-canadian-business-groups-press-ottawa-on-digital-tax-as-us-bill/