As NATO prepares to raise its defence spending target for member nations to five per cent of GDP, Prime Minister Mark Carney promised that Canada will finally meet the bare minimum two per cent threshold by the end of the year.
Carney made the announcement at the University of Toronto’s Munk School of Global Affairs on Monday.
“We’ll start by changing the way we support and invest in our armed forces,” he said. “Our plan will ensure Canada is strong at home and reliable abroad. We will ensure that every dollar is invested wisely, including by prioritizing made-in-Canada manufacturing and supply chains.”
NATO is expected to increase its target from the current two per cent of GDP to five per cent when the alliance’s leaders meet in The Hague for a summit later this month. U.S. President Donald Trump first pitched the new five per cent target in January and has been pushing for the new goal to be officially adopted.
Currently, Canada only spends 1.37 per cent of its GDP on defence, well below NATO’s basic two per cent benchmark — a requirement established in 2006 and already surpassed by most allies.
Now, with discussions at NATO centring on raising the target even further, Carney’s last-minute pledge falls short of bringing Canada up to par with its allies.
Of that sum, $2.6 billion will address the military personnel crisis. The Canadian Armed Forces currently faces a 13,000-member shortfall and struggles to meet recruitment and retention targets. The goal is to bring the number to 71,500 Regular and 30,000 Primary Reserve members by 2030.
Another $844 million will be allotted to repair and sustain equipment and infrastructure, including aging submarines and $560 million will be spent on strengthening the Department of National Defence and Canadian Armed Forces digital foundations.
The prime minister will attend the 2025 NATO summit in The Hague later this month, meanwhile, G7 leaders will be attending an annual summit in Alberta later this week.
Trump has been highly critical of NATO members who are not meeting their financial commitments and has threatened to withhold U.S. support in a future conflict.
However, Canada has never hit the two per cent benchmark since it was first established in 2006.
Carney has been trying to bolster Canada’s allies in Europe and shift reliance away from the U.S. amid a tense ongoing trade dispute.
“Canada can work towards a new international set of partnerships that are more secure, prosperous, just and free,” he said. “We can pursue deeper alliances with stable democracies, who have our interests, values, principles and history.”
The plan included $2 billion in spending to diversify Canada’s defence partnerships.
He added that Canada should no longer spend the majority of its national defence spending on U.S. companies.
“We should no longer send three-quarters of our defence capital spending to America,” said Carney.
According to Carney’s proposed defence plan, Canadian businesses and raw materials will be used to create tens of thousands of new high-paying jobs domestically.
Carney pledged to invest in new military aircraft, ships, submarines, vehicles and artillery. The government plans to spend $2.1 billion domestically and reduce existing hurdles that prevent Canada’s defence industry from supplying the CAF with critical equipment.
As part of his plan to bolster Canada’s Arctic defence, Carney also announced the implementation of sensor networks throughout the region to provide early warning signs of a threat.
One billion will be spent growing the CAF’s existing military capabilities, particularly in the Arctic.
“We can defend every inch of our sovereign territory, from the seafloor in the Arctic to cyberspace. So we can protect Canadians, our interests and our allies,” said Carney.
However, the Canadian Armed Forces is currently in poor shape when it comes to equipment and personnel recruiting and retention.
“Only one of our four submarines is seaworthy, less than half our maritime fleet and land vehicles are operational, and broadly we’re too reliant on the United States,” said Carney.
An additional $135 million will be spent on defence-related investments for other government departments and agencies during the 2025-26 fiscal year.