Canada meets NATO 2% spending target, promises 5% by 2035

TORONTO — Canada announced Monday it would acquire up to 12 new submarines in the largest military procurement in its history, a move Prime Minister Mark Carney said was necessary because of a “more dangerous and divided world” and escalating tensions with the Trump administration.

The submarine contract, with a German-Norwegian group led by ThyssenKrupp Marine Systems, is part of a broader rearmament that has seen Canada meet NATO’s 2% of GDP spending target ahead of schedule and pledge to reach the alliance’s new 5% target by 2035. The announcement came on the eve of the NATO summit in Turkey.

“The assumptions that shaped decades of Canadian defense and foreign policy have been upended,” Carney said Monday. “History is back with a vengeance.”

Carney also said “the long-held view that Canada’s geographic location will protect us is becoming increasingly archaic.” He has described Canada’s underinvestment in military readiness as leaving it vulnerable to the United States, which he said “is beginning to monetize its hegemony, charging for access to its markets and reducing its relative contributions to our collective security.”

Canada’s military buildup marks a sharp departure from the approach of Carney’s predecessor, Justin Trudeau, who called NATO’s spending target a “crass mathematical calculation” and said Canada would not meet it until 2032. Since becoming prime minister last year, Carney has promised spending levels not seen in more than half a century.

The country’s 2025 budget pledges $60 billion over five years to rebuild the armed forces. Canadian Armed Forces recruitment has reached a 30-year high, and Canada last year set up a new defense-investment agency to accelerate acquisitions.

The rearmament comes as Canada seeks to reduce its reliance on U.S. military equipment. This year, Canada became the first non-European country to join Europe’s defense procurement pact, entered talks with Sweden’s Saab for Arctic surveillance aircraft, and signed a $1.76 billion deal with Australia for an over-the-horizon radar system to monitor the Arctic.

Still, the buildup has drawn criticism. Pentagon Undersecretary of Defense for Policy Elbridge Colby said in May that Canada had “failed to make credible progress on its defense commitments” and announced the U.S. would suspend its participation in a joint Canada-U.S. defense board that was established in 1940.

Kerry Buck, who served as Canada’s ambassador to NATO from 2015 to 2018, said the submarine announcement signaled that Canada can procure “fast and at scale.” “That’s an important signal of credibility and commitment,” she said.

Competition for the submarine contract was fierce. South Korea’s HD Hyundai Heavy Industries and Hanwha Ocean also sought to win the deal with promises to use Canadian critical minerals and steel — an industry threatened by President Trump’s tariffs — in their supply chains. The U.S. does not manufacture the diesel-electric submarines Canada is procuring.

Despite having the world’s longest coastline, Canada currently has only one operational submarine.