Top stories today:

1. Canada drops digital tax to restart trade talks with
2. U.S. Senate votes on Trump’s “Big, Beautiful Bill” set for 9 AM ET
3. OpenAI said to be “recalibrating” compensation after Meta bids
4. Trump trade deals 10 days from deadline, sweeping reforms unmet
5. Baidu Ernie 4.5 open-weights AI model family released

0. Data and calendar

Listen to our AI-generated podcast summarizing today’s newsletter (beware of hallucinations):

1. Canada drops digital tax to restart trade talks with U.S.

• Trump and Canadian PM Mark Carney have agreed to restart negotiations and aim for a deal by Jul. 21 following Canada’s move.

• 3% of digital services revenue above C$20M in a calendar year would be charged as the digital tax.

• Jul. 2024: the tax was passed into law by Justin Trudeau’s government.

• Fri.: Trump had said he was ending all trade talks with Canada over digital tax and threatened new tariffs in a week.

3. Senate votes on Trump’s “Big, Beautiful Bill” set for 9 AM ET

The Senate version of the tax bill will add ~$3.3T to U.S. deficits over a decade, per the estimates by the nonpartisan Congressional Budget Office:

• -$4.5B in revenues and -$1.2T in spending through 2034: the CBO estimated.

• $507.6B in savings over a decade relative to current policy baseline.

• ~11.8M people could lose access to insurance benefits.

• Elon Musk has also criticized the Senate version of the tax bill for its proposed cuts to the $7.5K EV and clean energy credits.

The Senate bill would raise Qualified Small Business Stock (QSBS) tax incentive by $17B

• Would relax QSBS rules to let investors enter later, exit sooner, and skip taxes on up to 50% more of their windfalls.

Markets price in 70% odds of the bill being approved by Congress this week

• ~8 Republican senators have expressed opposition to portions of the bill.

4. OpenAI said to be “recalibrating” employee compensation to curb Meta’s talent poaching