Canada is set to implement a significant shift in its military procurement strategy, aiming to create 125,000 jobs through increased military spending of 5% of GDP over the next decade. The forthcoming strategy paper outlines Ottawa’s plan to reduce reliance on U.S. arms manufacturers by promoting domestic production as part of the “Buy Canadian” initiative. With an objective to allocate 70% of defense spending to Canadian firms—up from the current 50%—the strategy could boost local revenues by over C$5.1 billion (US$3.7 billion) annually.
The approach is a response to growing pressures from tariffs and shifting trade relations affecting critical Canadian industries. This push marks Canada’s most substantial military investment since World War II and seeks to cultivate “national champions” in defense production. The strategy, which will be made public soon, emphasizes the importance of building sovereign capabilities.
In the wake of changing international dynamics, including the impact of Donald Trump’s presidency, Canadian Prime Minister Justin Trudeau has called for collaboration among middle powers. The new strategy will also pivot toward partnerships with the European Union, the UK, and Indo-Pacific nations like Australia, Japan, and South Korea.
Industry leaders highlight the need for investment in mature defense companies capable of meeting government procurement demands. With approximately 600 defense companies currently generating C$14.3 billion in revenues, the sector contributes less than 1% to Canada’s GDP, underscoring the necessity for enhanced domestic investment to stimulate growth.
Why this story matters
- The strategy signals a significant change in Canada’s defense policy and industrial strategy, focusing on economic independence.
Key takeaway
- By increasing investment in domestic defense firms, Canada aims to bolster local economies and reduce foreign dependency.
Opposing viewpoint
- Critics may argue that shifting away from U.S. suppliers could hinder access to advanced technologies and collaborative defense partnerships.
