Canada’s Defence Shift
On February 17, 2026, Prime Minister Mark Carney’s government released Canada’s Defence Industrial Strategy (DIS), marking a major shift in Ottawa’s effort to rebuild the Canadian Armed Forces and strengthen the industrial base behind them. From Europe to the Middle East, Canada’s defence renewal is unfolding at a moment when global security crises are no longer distant or abstract. The Strategy opens from a clear sense of strategic urgency, warning that in an “increasingly dangerous and divided world, Canada must be prepared—to defend ourselves and our values, to secure our sovereignty.” While Canada’s DIS represents a major investment in military renewal, renewed U.S. tariff pressure exposes how heavily Canada’s defence-industrial base still depends on American-linked supply chains. The central question is therefore not only whether Canada is willing to spend more on defence, but whether that spending can translate into real military capability when the production systems remain exposed to decisions made outside Canada.
A Defence Credibility Problem
The Strategy responds to a longstanding concern about Canadian readiness. The concern was not simply that Canada had missed spending targets or faced procurement delays, but that it was struggling to sustain the capabilities its allies expected. Before the Strategy, a 2022 report by the House of Commons on National Defence noted that Canada’s allies were increasingly calling on the country to invest in its military and strengthen its contributions to Alliance operations, amid wider criticism of Canada’s defence posture. In testimony before the committee, Dr. Christian Leuprecht, a professor at the Royal Military College of Canada, warned that the Canadian Armed Forces (CAF) were “keeping its head above water,” but only by “treading water,” making clear that the status quo was not sustainable.
By the 2024 NATO summit, that concern had become more visible within the Alliance. Canada was being criticized for falling short of NATO’s basic 2% benchmark despite being one of the Alliance’s wealthier economies. The criticism was unequivocal as Canada was publicly accused during the summit week of “riding America’s coattails,” because it remained below the Alliance’s minimum expectation, while allies including the United Kingdom and the United States had already met or exceeded it. What began as a domestic readiness concern had become a public credibility problem within the Alliance.
Defence Industrial Strategy
After years of criticism, the DIS was intended to signal a more serious turn in Canadian defence policy. The scale of that turn was made clear in the 2025 federal budget, where the government pledged $81.8 billion to increase defence investment, including $6.6 billion specifically for Canada’s first DIS. That shift was reinforced in March 2026, when Canada crossed NATO’s 2% of GDP defence spending benchmark for the first time since the late Cold War, nearly a decade ahead of the previous 2032 timeline. For a country long criticized by allies, reaching that threshold gave the government’s defence agenda political weight beyond the budget numbers alone. Looking ahead to 2035, the Strategy projects $180 billion in defence procurement, $290 billion in defence-related infrastructure investment, and $125 billion in downstream economic activity. In total, it presents more than half a trillion dollars in overall investment, giving the Strategy the scale of a long-term national industrial project.
Where Tariffs Become a Defence Problem
The defence-industrial push is unfolding amid renewed U.S. tariff pressure under the Trump administration. In 2025, the Government of Canada warned that U.S. tariffs posed a serious threat to a trading relationship in which roughly US$2.5 billion in goods and services crosses the border each day, putting thousands of Canadian jobs at risk and weakening North American competitiveness. The deeper issue is that tariffs are not merely an economic challenge, as they can also disrupt the supply chains on which defence production depends. Beyond the immediate economic impact, the government also acknowledged that Canadian firms embedded in cross-border production networks would face logistical and financial challenges, with tariff uncertainty threatening to delay investment and slow growth in strategic industrial and manufacturing sectors tied to defence supply chains. A Canadian Global Affairs Institute analysis of the trade war’s impact on defence makes this connection directly, warning that “the protection of critical resources supply chains is fundamental to maintaining national defence capabilities for both the U.S and Canada, as these supply chains support the production of essential military technologies, weapons systems, and defence infrastructure.” The same analysis argues that disruptions to these supply chains, including those arising from trade policy disputes, can affect defence readiness and military operational capacity.
Ottawa’s response suggests that the government understood this as more than routine trade friction. In May 2026, the federal government announced $1.5 billion in new support for tariff-affected industries. At the same time, the Canadian Defence Industry Resilience Program (CDIRP) acknowledged a similar vulnerability inside the defence sector by funding Canadian businesses to expand production capacity for defence-related goods, equipment, services, and materials, while improving supply-chain resilience for component parts and raw materials. This was not simply about cushioning firms from higher costs; it was an acknowledgement that tariff pressure was reaching into the interconnected industrial system Canada needs to sustain defence production.
The Cost of Defence Dependence
Crucially, Canada’s exposure to U.S.-linked defence supply chains did not appear overnight. The relationship deepened over generations, with several major security shocks accelerating a broader pattern already underway. The Second World War pushed the two countries toward closer defence production, the Cold War made continental defence integration a strategic necessity, and the post-9/11 security environment further reinforced Canada’s reliance on U.S.-linked defence networks. These were not the only turning points, but they show the broader direction of travel: Canada gained access to the defence economy of the world’s dominant military power, while becoming increasingly dependent on a system it did not control.
That integration brought real benefits, but it also created an uneven dependence. In fact, the United States “holds significantly more influence, [where ] US defence industry does not depend on Canada for its survival.” Canada, however, aligned more closely with American procurement networks to access markets and production capacity that its domestic defence sector could not sustain on its own. This imbalance became harder to ignore under the second Trump administration with his tariff agenda, described as one of the sharpest ruptures in the two countries’ relations since the end of the Second World War, which placed pressure on a system Canada had long treated as stable.
Tariff uncertainty exposes more than a short-term trade problem. It shows that Canada’s ability to rebuild the CAF remains vulnerable to political decisions made outside Canada. The remedy is not to break from the United States, since Canada will continue to depend on allied defence cooperation. The remedy is to make that relationship less one-sided. Ottawa should use the DIS and the CDIRP to turn tariff protection into permanent production capacity inside Canada, so that U.S. market access strengthens Canadian capability rather than replacing it. Without that shift, new defence spending risks reproducing the same dependence the Strategy is supposed to overcome. Canada’s defence renewal will only be credible if it builds an industrial base that can turn spending into military power.
Disclaimer: Any views or opinions expressed in articles are solely those of the authors and do not necessarily represent the views of the NATO Association of Canada.
