Canada plans to increase its military-related expenditures enough this year to hit a key target laid out by the NATO military alliance.
Newly-elected Prime Minister Mark Carney on 9 June said Ottawa will spend an additional $6.5 billion (C$9 billion) on defence this fiscal year, which will bring Canada’s military expenditures to a level equivalent to 2% of the country’s gross domestic product (GDP).
“In an increasingly dangerous and divided world, Canada must assert its sovereignty,” Carney says. “We will rapidly procure new equipment and technology, build our defence industrial capacity, and meet our NATO defence commitment this year.”
After accounting for the extra $6.5 billion, Ottawa will report a spending level of $45.8 billion to NATO for the current fiscal year 2025, which began on 1 April and concludes on 31 March 2026.
Canadian defence officials speaking to FlightGlobal on background say the government will also be counting another $10 billion in defence-related spending outside the Department of National Defence, such as security activity by the Canadian coast guard.
NATO reporting rules allow for the counting of relevant expenditures elsewhere in the government and the practise is common among many member states.
A fact sheet released by the prime minister’s office specifically notes the Canadian coast guard will be integrated into the country’s NATO defence capability for maritime surveillance.
The change comes as heads of state from the 32 NATO members are preparing to meet in the Netherlands later this month for the alliance’s annual summit. There, the alliance is expected to double its defence spending target to 5% of GDP for each member state – meaning Ottawa’s triumph may prove to be short-lived.
Canada has long been a laggard when it comes to funding its military, for years failing to meet the 2% spending target.
In 2024, Ottawa spent just over the equivalent of 1.4% of Canadian GDP of defence – among the lowest levels reported by alliance members, according to the latest NATO figures.
Canada also missed a second NATO target: allocating at least 20% of the defence budget toward military hardware. Under 18% of Ottawa’s 2024 defence budget went towards equipment – the second-lowest rate in the alliance.
Failure to meet the 2% spending target has become a favourite line of attack for US President Donald Trump, who has for years accused Washington’s allies of being free-loaders taking advantage of American security guarantees.
Following his return to the White House in January, Trump has ushered in one of the worst periods of US-Canada relations in modern times, repeatedly communicating his desire for Canada to be absorbed into the USA and launching a trade war that has rocked the closely linked economies.
The move by Carney, who was propelled into office by a wave of anti-Trump sentiment in Canada, to quickly raise defence spending to 2% is no doubt connected to his sparring with Trump and a desire to eliminate that critique.
Speaking on background, defence officials in Ottawa say the additional spending announced on 9 June will be targeted toward operations, rather than capital expenditures like buying new equipment.
Canada already has plans in place for significant new equipment purchases in the coming decade, including Lockheed Martin F-35A stealth fighters, General Atomics Aeronautical Systems MQ-9B uncrewed aircraft and Boeing P-8A jets for maritime patrol, along with a new utility helicopter, and a diverse fleet of new trainer aircraft.
Of the new spending, nearly $2 billion will be spent on recruiting and retention to expand the Canadian armed forces (CAF) by some 13,000 active and reserve personnel by 2030. Another $617 million will go toward improving maintenance and sustainment capabilities.
Amid the worst relations between Canada and the USA in modern times, some of the largest spending on new items will go toward lessening Ottawa’s dependence on its southern neighbour for security.
Canada now plans to spend some $1.5 billion on supporting its own domestic defence industry. Although lacking specifics, the funds will go toward developing a national defence industrial strategy and “reducing obstacles that currently limit industry’s ability to provide critical equipment and support to the CAF”.
Defence officials say one area of particular focus will be the domestic production and stockpiling of critical minerals.
Notably, a further $1.5 billion will be directed toward diversifying Canada’s defence partnerships “beyond the United States”.
“Canada will continue to leverage partnerships with the US when it is in Canada’s best interest to do so,” Ottawa says, in a sign of the rhetorical chill that has descended upon North America.
That is a notable departure from the tone struck in February under previous Prime Minister Justin Trudeau, when Canadian officials touted the close co-operation and defence partnerships between Canada and the USA.
