VICTORIA, British Columbia — The Canadian government has earmarked new funding to shore up the country’s defense industry and create new links with other nations to reduce its reliance on U.S. military equipment.
Prime Minister Mark Carney announced Monday that his government will provide $6.6 billion ($9 billion Canadian dollars) in new funding for the Department of National Defence over the next ten months. That money will allow Canada to reach by April 2026 the NATO goal of spending two percent of GDP.
By then Canada will be spending $45.7 billion (CA $62.7 billion) on defense and security. That figure includes spending by both the defense department and other federal departments on defense.
Of the new money, $3 billion (CA 4.1 billion) will go to strengthen the country’s domestic defense industry through various new initiatives as well as redirecting Canadian procurement away from U.S. equipment.
“We should no longer send three-quarters of our defence capital spending to America,” Carney said in a televised speech.
Some of the funding is expected to be directed toward the Rearm Europe initiative which Carney has expressed an interest in joining. He has talked about making new alliances with European nations in the wake of tariffs and other threats of economic punishment by U.S. President Donald Trump. Trump has warned that the only way Canada could escape economic measures would be to become a 51st state.
Carney has rejected that.
Canadian government officials, speaking on background, said that Canada will continue to have close relations with its American neighbor as well as leverage partnerships with the U.S. when it is in Canada’s best interest to do so.
But Carney also warned that the U.S.-Canada relationship has changed and that Canada needs to reduce its reliance on Washington.
“The United States is beginning to monetize its hegemony: charging for access to its markets and reducing its relative contributions to our collective security,” he said in his televised address.
Details on new initiatives with Canadian industry are expected to be unveiled in the coming year. Carney told the Canadian Broadcasting Corporation on May 27 that he hopes to be able to sign on to the Rearm Europe initiative by July 1.
Canadian defense officials, speaking on background at a technical briefing for journalists on Monday, noted that the extra spending Carney announced will set the stage for future defense procurements. Carney has promised his government will purchase self-propelled howitzers, a fleet of conventionally-powered submarines, and a fleet of Canadian-made early warning and control aircraft.
A new ground-based air defense system will also be purchased for the Canadian Army. Carney has also promised purchasing additional heavy icebreakers, although he has not provided details on numbers of such ships.
The new funding announced Monday will also finance pay increases for Canadian Forces personnel as well as improved cyber defense initiatives. In addition, it will be used to expand and enhance existing and emerging military capabilities, according to government officials. No specifics were provided but this money will help efforts to allow Canada to become increasingly self-sufficient in defending its territory, especially in the Arctic.
This initiative will include “a focus on Canadian suppliers,” according to the Department of National Defence.
In addition, Carney had already ordered a review of Canada’s purchase of the Lockheed Martin F-35 fighter jet. The Canadian government committed in January 2023 to spending $13.2 billion (CA $19 billion) for the purchase of 88 F-35s from the U.S. government.
Carney, who linked the review to Trump’s ongoing trade war against Canada, said at this point the country has only committed to purchasing the first 16 F-35s. He noted that he has had discussions with French and British government officials about whether they could provide an alternative to the F-35 and whether that aircraft could be built in Canada.
Department of National Defence spokeswoman Andrée-Anne Poulin stated in an email that the F-35 review is still ongoing. “It is anticipated that this review will be finalized in summer 2025,” she said in a June 2 email. No further timelines were provided.
David Pugliese is the Canada correspondent for Defense News.