Canada Launches Largest Military Deal to Modernize Armed Forces

Canada is rapidly advancing the modernization of its military, a force long regarded as a "weak link" within NATO, according to a report published Tuesday by the Wall Street Journal. The country reached the alliance’s defense spending target of 2% of GDP ahead of schedule last year.

Recruitment rates in the Canadian Armed Forces have hit their highest levels in three decades, and the government has begun investing billions of dollars in new military equipment. On Monday, Canada announced plans to acquire up to 12 new submarines as part of a comprehensive effort to update its aging fleet.

Prime Minister Mark Carney stated on the eve of the NATO summit, "In a more dangerous and divided world, Canada must do more to defend itself, protect its sovereignty, and support its allies." He revealed that Canada has entered negotiations with a German-Norwegian alliance led by ThyssenKrupp Marine Systems to procure submarines, marking the largest military procurement deal in Canadian history.

Carney added, "The assumptions that shaped Canada’s defense and foreign policies for decades have been turned upside down; history is returning with a fierce force," highlighting a significant shift in the country’s strategic posture.

This change represents a notable departure for a founding NATO member that has faced sharp criticism from successive U.S. presidents and other allies for not fulfilling its expected role or sharing the defense burden equitably.

Recently, Canadian military leadership warned that the country cannot simultaneously lead a NATO battle group and respond to other crises, and it halted all non-essential activities due to a severe personnel shortage.

The increase in defense spending comes amid trade and geopolitical tensions with the Trump administration. Carney had stated last year that the long-held belief that Canada’s geographic location would provide protection is increasingly outdated.

He noted that Canada’s underinvestment in military readiness left it vulnerable to pressure from the United States, which "has begun leveraging its dominance for financial gain, imposing tariffs for market access and reducing its relative contributions to collective security."

Since taking office last year, Carney has pledged to raise Canadian military spending to levels not seen in over fifty years, according to the report. This marks a fundamental shift from his predecessor, Justin Trudeau, who described NATO’s spending target as a "blunt arithmetic" that does not automatically make Canada safer and said the country would not meet the target before 2032.

Canada currently meets NATO’s 2% GDP defense spending benchmark and has committed to reaching a new alliance goal of 5% of GDP by 2035.

In support of this effort, Canada increased military personnel salaries and established a new defense investment agency last year to accelerate procurement processes.

The 2025 budget includes a pledge to spend $60 billion over five years to rebuild the armed forces. This year, Canada unveiled a new defense industry strategy aimed at awarding contracts to domestic companies, boosting military exports by 50%, and diversifying military suppliers away from the United States.

In line with this diversification, Canada became the first non-European country to join the European Defence Procurement Agreement this year. It entered talks with Swedish company Saab to acquire surveillance aircraft to monitor and deter threats in the Arctic, bypassing American suppliers.

Additionally, Canada signed an agreement last month with Australia to purchase an over-the-horizon radar system worth $1.76 billion, also intended for the Arctic region.

Despite meeting NATO’s minimum defense spending level last year, Canada still lags behind many allies; only a few of the 32 NATO members spend less than Canada.

In May, Elbridge Colby, U.S. Assistant Secretary of Defense for Policy, criticized Canada for "failing to make tangible progress on its defense commitments." Colby announced on social media that the United States would suspend its participation in the joint defense board between Canada and the U.S., established in 1940.

Canada’s New Submarine Fleet and Arctic Strategy

Canada has selected a German-Norwegian consortium to build a new submarine fleet for its navy, a decision reported by U.S. media as reflecting Prime Minister Carney’s intent to reduce military and economic reliance on the United States, according to the New York Times.

The Canadian government confirmed the contract includes the construction of 12 diesel-electric Type 212CD submarines, following a competition with South Korean company Hanwha Ocean, which also submitted a bid.

The winning bid is led by Germany’s ThyssenKrupp Marine Systems, in partnership with the German and Norwegian governments. Both countries have already contracted these submarines for their navies, although the vessels have not yet entered operational service.

Canada plans to replace its current fleet of four submarines, purchased secondhand from the United Kingdom in 1998. Only one of these remains operational, prompting the Canadian Navy to prioritize fleet modernization urgently.

Although technical assessments found the German-Norwegian and South Korean offers comparable in capabilities, Ottawa favored the European proposal for its more suitable delivery schedule.

The new submarines are expected to be primarily deployed for Arctic patrols, as Canada seeks to strengthen its presence in a region experiencing increasing competition among major powers, including Russia, the United States, and China.

Canada’s Evolving Defense Relations with the United States

Prime Minister Carney has commented on the "abnormal" nature of the current relationship with Washington, reflecting shifts in defense and economic ties between the two countries amid broader geopolitical changes.