Canada launches "Buy Canadian" defense strategy to cut US dependence

Canada currently buys about two-thirds of its military equipment from foreign suppliers, mostly American. Carney's strategy aims to flip that ratio, directing 70% of defense procurement to Canadian firms within a decade. This is the first time Canada has ever published a formal defence industrial strategy, and it comes after decades of procurement disasters including shipbuilding projects that doubled in cost from C$37.7 billion to over C$73 billion.

The plan uses a build-partner-buy hierarchy that puts Canadian companies first in line for all military contracts. If Canadian firms can't build something alone, Ottawa will partner with allied nations to co-develop it and transfer intellectual property to Canada. Buying off-the-shelf from foreign suppliers, including American ones, becomes the last resort rather than the default.

Ottawa created a new Defence Investment Agency to centralize procurement for all projects over C$100 million. Canada's old system split procurement across multiple departments, creating such severe bottlenecks that an average of 20% of procurement funds, as much as C$1.5 billion per year, went unspent because the bureaucracy couldn't process orders fast enough. The cumulative total of deferred spending exceeded C$10 billion.

The strategy explicitly targets reduced dependence on US defense contractors. Carney said Canada must act so we are never hostage to the decisions of others when it comes to our security. This language directly responds to the Trump administration's use of defense relationships as leverage in trade disputes and the 2026 US National Defense Strategy, which describes allies as freeloading dependents.

Defense spending is climbing to 2% of GDP (about C$63 billion) in 2025-26 and is projected to reach 5% of GDP by 2035. The government will launch a Canadian Defence Industry Resilience program in 2026, including building domestic nitrocellulose production by 2029 and securing supply chains for defense-critical minerals like steel, aluminum, and rare earths.

Canada isn't alone in this pivot

About 55% of European NATO states' major arms imports came from the US between 2019 and 2023

Germany now directs only 8% of its $83 billion annual defense budget to American systems The Carnegie Endowment for International Peace describes a broader pattern where the post-Cold War transatlantic defense model is breaking down due to strategic divergence, industrial bottlenecks, and political uncertainty in 🌲Washington.

Conservative leader PPPierre Poilievre dismissed the strategy as a salad bowl of buzzwords and called for cutting bureaucracy so military personnel can make purchases directly. Conservative defence critic JBJames Bezan said the government has missed targets on nearly every aspect of defence policy and allowed over C$12 billion to lapse in the last decade. Defense analyst PLPhilippe Lagasse of Carleton University called the document solid but measured but noted it doesn't define what counts as a Canadian company, leaving the door open for foreign subsidiaries to qualify.

The strategy includes a Canada Defence Skills Agenda to build the workforce needed for 125,000 new jobs over a decade. Industry leaders have flagged workforce capacity as a key barrier, noting that without a clear demand signal from government, companies won't invest in expanding. The strategy also creates a Defence Advisory Forum co-chaired by the defence and industry ministers to give industry direct input on procurement planning.