Prime Minister Mark Carney announced the launch of Canada’s first-ever Defence Industrial Strategy on Tuesday, promising a sweeping overhaul of military procurement, a dramatic increase in defence spending, and a renewed push to build weapons, technology, and equipment at home.
Carney said the new strategy is designed to strengthen Canada’s sovereignty, boost domestic industry, and reduce reliance on foreign suppliers in what he called “a more dangerous and divided world.”
“The assumptions that shaped decades of Canadian defence and foreign policy have been completely upended,” said Carney, pointing to growing threats ranging from Arctic incursions to cyberattacks and the rapid evolution of warfare through drones, autonomous systems, and space-based weapons.
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At the heart of the plan is a “build, partner, buy” framework. Under the policy, the federal government will prioritize Canadian companies for military procurement in areas where Canada has sovereign capabilities.
Where domestic production is not possible, Canada will partner with trusted allies to attract investment and transfer technology. Only as a last resort, Carney said, will Ottawa buy equipment outright from abroad — and even then, it will seek to maximize economic benefits at home.
The federal government also announced the creation of a new Defence Investment Agency (DIA), tasked with streamlining procurement, cutting red tape, and accelerating domestic production.
Carney said Canada is now on track to meet NATO’s two per cent defence spending target by Spring 2026 — about a decade ahead of the previous schedule — and confirmed the plans to double defence spending by the end of the decade. Canada will meet NATO’s five per cent goal by 2035. That includes an additional $80 billion over the next five years, plus $45 billion per year for domestic resilience under NATO commitments.
The last time Canada’s defence spending hit at least two per cent of GDP was in the 1980s. Spending hit roughly 40 per cent of GDP during the Second World War, before falling to just over seven per cent in the early 1950s during the Korean War and the start of the Cold War. It also remained relatively high throughout the 1960s, between two and four per cent.
Over the next decade, Ottawa plans to invest $180 billion in defence procurement and $290 billion in defence and security-related infrastructure, with the federal government projecting more than $125 billion in additional downstream economic benefits.
The strategy aims to create more than 125,000 high-paying jobs and increase Canadian defence sector revenues by more than 220 per cent, while boosting defence exports by 50 per cent. Small and medium-sized businesses are expected to see defence-related revenues rise by $2.8 billion annually, reaching $4.5 billion.
Carney highlighted Canada’s existing strengths in aerospace, training and simulation, combat vehicles, munitions, and naval shipbuilding, as well as emerging capabilities in space, artificial intelligence, cyber, quantum technologies, robotics, and drones.
As part of the push for innovation, the federal government will increase defence-related research and development spending by 85 per cent and create a new Bureau of Research, Engineering and Advanced Leadership (BOREALIS) to coordinate work on frontier technologies such as AI and quantum computing.
The strategy also includes a new Canadian Defence Industry Resilience Program aimed at securing critical supply chains, including the production, processing, and stockpiling of defence-critical minerals. Canada will coordinate these efforts with allies through the G7 and NATO, noted the prime minister.
For decades, Carney argued, Canada has underinvested in both defence and its defence industries, relying too heavily on geography and allies for protection — specifically, the United States, of course. The new approach, he said, is meant to reverse that trend and give Canada greater strategic autonomy.
“To be clear, strategic autonomy does not mean isolation. It means being strong enough to be a partner of choice — rather than a dependent,” said Carney.
“It means building a domestic defence industrial base so that we are never hostage to the decisions of others when it comes to our own security. And it means diversifying our partnerships so that we are resilient against any single point of failure… When we partner with trusted allies in Europe, the United Kingdom, and the Indo-Pacific, we access capabilities and technologies that strengthen us all. By diversifying these partnerships, we reduce our exposure to any single alliance or any single decision that we do not control.”
If fully implemented, the Defence Industrial Strategy would represent one of the largest shifts in Canada’s defence and industrial policy in generations, tying national security more closely to domestic economic growth.
“In this century, the work of defending Canada is the work of building Canada,” continued the prime minister.
Carney is also looking to have the new Defence, Security and Resilience Bank (DSRB) — a newly created multilateral institution designed to finance defence, security, and resilience projects for North Atlantic Treaty Organization (NATO) members and allied nations — located in Canada. With about 40 member nations, it would provide low-cost loans for member and allied nations to improve their big budget costs for improving defence and security, and protecting critical infrastructure.
Government and private entities in Vancouver, Toronto, Ottawa, and Montreal have expressed their interest in landing the headquarters office location, which would provide about 3,500 high-paying jobs. But the first step would be to have NATO nations agree that the bank should be located in Canada, with the subsequent location on the headquarters city decided by the federal government.