Canada Gives U.S. Arms Makers the Cold Shoulder on Military Spending

Canada plans to unveil a new strategy that will shift its current reliance on American companies to Canadian military suppliers.

The Canadian government, faced with increasing hostility from the Trump administration, plans to divert billions of dollars in military spending it long gave to U.S. defense companies and direct it instead to domestic manufacturers.

Prime Minister Mark Carney’s wholesale expansion of Canadian military spending was prompted by pressure from President Trump, but with relations between the longstanding allies deteriorating, American companies will no longer reap the benefit.

The new defense industry strategy, which is to be announced this week, is the latest step by Mr. Carney to distance his country from the United States following Mr. Trump’s decision to impose tariffs against several key Canadian industries. The president has also made repeated suggestions that Canada should become the 51st American state.

Last month, at the World Economic Forum in Davos, Switzerland, Mr. Carney said, without naming Mr. Trump or the United States, that there has been a permanent “rupture” in the world order. He called upon middle-size nations to cooperate as a counter to the world’s superpowers.

Echoes of Mr. Carney’s speech were heard at the Munich Security Conference last week. Chancellor Friedrich Merz of Germany said that the international rules-based order “no longer exists.” Along with President Emmanuel Macron of France, he also spoke about Europe’s push for military autonomy.

Like Canada, European nations have begun to question the reliability of the United States as an ally, given the Trump administration’s threats against Greenland.

Mr. Trump has long complained that other NATO members were not carrying their financial weight.

After becoming prime minister just under a year ago, Mr. Carney promised to raise Canada’s military spending to levels not seen since the Korean War. Last June, he poured 9.3 billion Canadian dollars — about $7 billion — into Canada’s military to meet NATO’s minimum spending level of 2 percent of gross domestic product. Canada has agreed to raise its military spending to NATO’s new target of 5 percent of gross domestic product by 2035.

But Mr. Carney has emphasized that Canada will no longer acquire 70 to 75 percent of its weapons from the United States, as has been historically the case. The two nations’ armed forces are closely entwined and NORAD, the North American air defense system, is led jointly by American and Canadian commanders.

Under the new policy, the government plans to increase the revenues of Canadian military suppliers by 240 percent by directing 70 percent of military spending to domestic companies and increasing arms exports from Canada by 50 percent. The government predicts that its domestic purchasing plan will create 125,000 additional jobs in the sector over the next decade.

“Long-held assumptions have been upended — about the end of imperial conquest, the durability of peace in Europe, and the resilience of old alliances,” the policy document says. “It is more important than ever that Canada possess the capacity to sustain its own defense and safeguard its own sovereignty.”

The plan also includes increasing spending on military-related research and development by 85 percent and makes the Arctic a focus for the armed forces.

“This strategy is a game changer for Canada,” said Margaret McCuaig-Johnston, a senior fellow at the University of Ottawa’s graduate school of public and international affairs. “The big question, and we’ll have to see how it plays out over time, is what percentage of our defense investments will be made with American defense companies, our historic partners.”

Canada is also reviewing, for the second time, its decision to buy up to 88 F35 fighter jets from the United States. Currently Canada is only committed to purchasing 16 of the planes, which have been criticized by some as too costly and not well suited to Canada’s needs.

Mélanie Joly, the industry minister, has criticized the limited level of Canadian manufacturing created by the F35 purchase. The government, she said last year, may ultimately buy a smaller number of F35s along with a fleet of Gripen E fighters made by Saab. The Swedish aircraft maker has partnered with Bombardier, the Montreal-based jet manufacturer, to eventually build the Gripen in Canada if the plane is chosen.

Canada is also shopping for about 12 new submarines, though American shipyards do not manufacture the diesel electric subs it wants. Hanwha Ocean, a South Korean company, and ThyssenKrupp Marine Systems of Germany are both promising substantial industrial benefits for Canada if they win that contract.

In Hanwha’s case, those benefits go beyond military spending. In Ottawa last month to promote Hanwha’s ship, a delegation of South Korean officials signed an agreement to explore bringing Korean automotive manufacturing to Canada.

Hanwha has also agreed to spend $250 million to build a structural steel beam mill at Canada’s only domestically owned steel maker and to buy products from it. Algoma Steel, the company, has laid off workers since Mr. Trump imposed a tariff that now sits at 50 percent on Canadian steel.

Ms. McCuaig-Johnston said the new defense strategy was overdue.

“Canada has not invested adequately in our defense industries, as we perceived ourselves to be protected by our U.S. neighbor,” she said. “That has clearly changed.”

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