After 12 years of gradual progress, Canada has finally officially reached NATO’s “defense spending at two percent of GDP” target set at the 2014 Wales Summit. Last June, the Liberal government added CAD 9.3 billion to the Department of National Defence budget, bringing total defense spending slightly above CAD 61 billion, thereby achieving the goal.
Canadian Prime Minister Mark Carney announced the news at Halifax Military Base on March 26, saying: “Over the past 10 months, Canada’s new government has acted at an unprecedented speed and scale. In 10 months, we have invested over CAD 60 billion in defense and security. This is the largest annual increase in generations.”
According to CTV News, Carney said, “This is the first time since the fall of the Berlin Wall that Canada has allocated two percent of GDP to defense spending.”
This achievement stands in stark contrast to less than two years ago, when former Prime Minister Trudeau called the two percent target “rough math,” reportedly telling allies that Canada would never reach it.
In 2024, Canada’s defense spending was only 1.47 percent of GDP. NATO data showed that 11 member countries were below the target at that time. This year’s report shows that all 32 NATO members have now reached the standard.
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CBC reported that NATO Secretary-General Rutte said: “For a long time, European allies and Canada relied too heavily on U.S. military strength. We did not take enough responsibility for our own security, but that mindset has now clearly changed.”
Rutte partly attributed this shift to U.S. President Trump. He pushed countries like Spain, Italy, Belgium, and Canada toward the two percent goal and promoted NATO’s commitment to raise defense spending to five percent of GDP by 2035.
The Trump effect
Trump’s tough NATO diplomacy began in 2018, when he repeatedly threatened that the U.S. would leave NATO if allies did not fulfill their commitments. At that time, only seven members met the two percent standard.
In 2024, during his second presidential campaign, Trump even stated that if he judged member countries’ military spending as insufficient, the U.S. might not fulfill its defense obligations.
At the same year’s NATO 75th anniversary summit, U.S. House Speaker Johnson criticized Canada as “shameful,” claiming it had long “ridden on the coattails of the U.S.”
According to The Star, in Washington, Trump criticized NATO for not joining the U.S.-Israel war against Iran, calling it a “test” of NATO, and expressed disappointment: “We’ve spent trillions to protect Europe and NATO countries—but they have not stood up for us. We don’t need them anymore.”
Canada’s Defense Minister McGinty told The Star on March 26 that Canada-U.S. relations were not the only reason for rebuilding military strength. He emphasized that Canada is strengthening domestic military capabilities through this year’s “Defense Industrial Strategy” and noted the move also relates to Russia, China, and Iran. He specifically mentioned that Iran recently launched a missile in conflicts with the U.S. and Israel, demonstrating far greater range than previously expected.
McGinty said, “This is not the product of any single geopolitical or sovereign nation’s actions; it involves complexities far beyond Canada-U.S. relations and the North American situation.”
Carney government’s defense strategy
Amid Trump’s trade wars and continued threats toward Canada, Carney launched the “Rebuild, Rearm, Reinvest” plan. Canada is working to overcome recruitment shortages and outdated equipment, with official reports noting that some equipment frequently cannot operate.
Last June, Carney announced an additional CAD 9.3 billion in defense spending to fulfill NATO commitments. CAD 2 billion was allocated to increase Canadian Armed Forces personnel salaries, while the rest went toward new equipment purchases, including aircraft, armored vehicles, ammunition, drones, and communications technology, as well as improvements to barracks and maintenance of existing ships and planes. CAD 3 billion will be used to upgrade military bases in Atlantic provinces, build a naval destroyer training center, and provide new housing for soldiers in Nova Scotia.
The Carney government has pledged continued increases in defense spending, with hundreds of billions allocated to strengthen Canada’s Arctic presence and purchase new military equipment, including plans for up to 12 new submarines. Carney said Thursday that the decision—whether to buy submarines from South Korea or a joint German-Norwegian design—will cost tens of billions and be finalized by the end of June.
The Prime Minister stated that all planned acquisitions, including those mentioned above, will bring approximately CAD 500 billion in defense spending over the next decade. Canada and its NATO allies have previously agreed to raise “core” defense spending to 3.5 percent of GDP, with an additional 1.5 percent for infrastructure and defense-related projects such as civil preparedness, aiming to achieve these targets by 2035.
“The nature of war is changing rapidly. The proliferation of drones, autonomous systems, and orbital weapons is a major cause of this change,” Carney said. “We know the world has changed, and we know Canada must change with it.”
The government also released a new Defense Industrial Strategy, aiming to reduce reliance on the U.S., enhance domestic military production, and transform Canada from a military technology “buyer” into an “exporter.”
An effective military ally?
However, defense analysts note that Canada still requires major rebuilding to become a truly effective military ally.
According to CTV News, David Perry, president of the Canadian Global Affairs Institute, said: “Over the years, the external pressures and reputational losses we’ve endured far exceed what Ottawa is willing to acknowledge.” He noted that past underinvestment in defense reduced military readiness. Although recruitment has increased, there remains a shortage of combat-ready personnel.
Equipment issues remain severe. “Whether it’s aircraft, army vehicles, or ships, often only half of our equipment is truly deployable.” For example, Canada may struggle to assist in a NATO mission to lift a blockade in the Strait of Hormuz. Perry said, “What can we contribute? Possibly not even a single frigate, because deployable numbers are already very low and committed to other missions.”
By Li Xin
