Tariffs and the Future of Digital Business
As global trade tensions rise and governments reassess economic policies, one question has started to echo across boardrooms and tech forums alike: Will tariffs eventually hit digital services, including SaaS platforms? At Syntheia, we’ve been closely watching the April 2, 2025 tariff changes announced by the U.S. government. These developments are a timely reminder of the complex relationship between tariffs and the future of digital business.
Fortunately for digital-first companies like ours—based in Toronto, Canada and now serving clients across the Globe —these new tariffs currently apply only to select physical goods and manufacturing sectors. For now, SaaS platforms and other digital services remain untouched. But the landscape can change quickly.
What Do the April 2025 Tariffs Cover?
The latest U.S. tariffs are part of a broader economic strategy. They aim to reshore manufacturing and protect domestic industries. These actions also respond to ongoing trade imbalances between the U.S. and other nations. The new measures mainly target physical goods like electric vehicles, batteries, solar panels, steel, and aluminum.
For Canadian tech companies—especially SaaS providers—this news comes as a relief. Digital services remain outside the scope of these tariffs. They don’t travel in trucks or shipping containers, so they avoid traditional customs processes. Most trade frameworks don’t classify software as an importable good. If you’re delivering software via the cloud, you’re not paying border taxes today.
Why the Digital Sector Is Still Untouched
There are several reasons digital businesses have remained outside the scope of traditional tariffs:
Intangible Products: SaaS platforms and digital tools are not physical goods, which makes them harder to regulate through conventional trade mechanisms.
Jurisdiction Challenges: It’s difficult to determine the point of “entry” for digital services. If your servers are in one country, your development team in another, and your customers in a third, where does the service originate?
Global Interdependence: The digital economy is highly integrated. Most businesses—regardless of location—rely on cloud infrastructure, software tools, and APIs built around global collaboration. Imposing tariffs could backfire economically.
But just because digital services are currently protected doesn’t mean this will always be the case. As we consider tariffs and the future of digital business, staying informed and agile is more important than ever.
Signs of Change on the Horizon
Governments around the world are exploring new taxation frameworks for digital services. The European Union is leading the charge. It has introduced the Digital Services Tax (DST), aimed at large technology companies. These companies generate significant revenue from users in EU member states.
In the U.S., political debate continues around taxing foreign digital service providers. This debate is driven by concerns over lost revenue. Domestic companies argue they face unfair competition from global digital platforms. So far, tariffs have targeted only physical goods. However, future trade disputes could include digital services.
What might that look like? Cloud hosting fees, AI tools, or API usage could be taxed based on the user’s location. That would differ from today’s model, which focuses on company headquarters. While it’s not yet a reality, it remains a possibility. Digital businesses should stay alert and prepare to adapt.
Looking Ahead
Tariffs and the future of digital business are becoming increasingly intertwined topics. While the April 2, 2025 policy changes offer no immediate threat to digital providers, the conversation around digital taxation is just getting started.
In the meantime, companies will continue to innovate, expand, and support businesses across borders—untethered by shipping lanes or customs agents. But we’ll also be keeping a close eye on global policy trends, because the future of digital business isn’t just in the cloud—it’s in the details of the next trade agreement.
About the Author
Paul Di Benedetto is a seasoned business executive with over two decades of experience in the technology industry. Currently serving as the Chief Technology Officer at Syntheia, Paul has been instrumental in driving the company’s technology strategy, forging new partnerships, and expanding its footprint in the conversational AI space.
Paul’s career is marked by a series of successful ventures. He is the co-founder and former Chief Technology Officer of Drone Delivery Canada. In the pivotal role as Chief Technology Officer, he lead in engineering and strategy. Prior to that, Paul co-founded Data Centers Canada, a startup that achieved a remarkable ~1900% ROI in just 3.5 years. That business venture was acquired by Terago Networks. Over the years, he has built, operated, and divested various companies in managed services, hosting, data center construction, and wireless broadband networks.
At Syntheia, Paul continues to leverage his vast experience to make cutting-edge AI accessible and practical for businesses worldwide, helping to redefine how enterprises manage inbound communications.