Ottawa Explores Diversification Away From American Systems as Trade Tensions and Sovereignty Concerns Mount

In a move that could reshape North American defense cooperation and ripple through global arms markets, Canada is reportedly considering a significant pivot in its military procurement strategy. Recent discussions in Ottawa point toward halting or scaling back major purchases of U.S.-made defense systems, including the Lockheed Martin F-35 Lightning II fighter jets, Terminal High Altitude Area Defense (THAAD) batteries, and participation in the emerging Golden Dome missile defense initiative. Instead, the government under Prime Minister Mark Carney appears poised to emphasize domestic production capabilities while deepening ties with European partners, including Sweden, and potentially exploring broader international collaborations.

The reports, circulating widely on social media and defense-focused channels, suggest potential U.S. economic exposure amounting to tens of billions of dollars in lost contracts. While no official announcement has confirmed a complete halt, the speculation aligns with ongoing reviews triggered by escalating bilateral frictions.

F-35 Program at the Center of the Debate

At the heart of the controversy lies Canada’s long-troubled F-35 acquisition. Ottawa committed in 2022 to purchasing 88 of the advanced stealth fighters to replace its aging fleet of CF-18 Hornets, a decision that ended years of competitions and political delays. The program, already plagued by cost overruns—now exceeding original budgets by billions—has become a flashpoint amid renewed U.S.-Canada trade disputes.

Prime Minister Carney, who assumed office following Justin Trudeau’s tenure, initiated a formal review of the deal shortly after taking power. Canada has made payments for an initial tranche of 16 aircraft, with deliveries expected to begin late in 2026, and has even authorized funds for long-lead components on an additional 14 jets. Yet the full commitment to the remaining airframes remains under scrutiny.

Rising costs, combined with political rhetoric from Washington questioning Canadian contributions to shared defense burdens, have fueled domestic calls for alternatives. Opposition voices, including from the New Democratic Party, have urged outright cancellation in favor of other platforms. Reports indicate Ottawa is seriously evaluating a reduced F-35 order—potentially halved—and supplementing it with the Swedish Saab JAS 39E Gripen, a multirole fighter praised for its lower lifecycle costs, operational flexibility, and potential for industrial partnerships with Canadian firms like Bombardier.

Swedish officials, leveraging their country’s recent NATO accession, have actively courted Canada with offers that include technology transfers and joint manufacturing. Such a shift would mark an unprecedented break from decades of near-exclusive reliance on American aerospace hardware.

Missile Defense and the Golden Dome Question

Beyond fighters, discussions extend to ground-based systems like THAAD, a U.S. Army anti-ballistic missile platform designed to intercept short- to intermediate-range threats. Canada has historically avoided deep entanglement in ballistic missile defense, a policy stance that has complicated integration into broader continental architectures.

The proposed Golden Dome—a sweeping, multi-layered U.S. homeland missile defense concept unveiled under the current administration—has intensified the debate. Envisioned as a next-generation shield incorporating space-based sensors, interceptors, and ground systems to counter ballistic, hypersonic, and cruise missiles, the initiative draws comparisons to earlier ambitious programs like Reagan’s Strategic Defense Initiative.

Canada has expressed conditional interest in participating, with Prime Minister Carney stating that involvement would proceed only if it aligns with national interests. However, demands from Washington for substantial financial contributions—potentially in the tens of billions—have raised alarms in Ottawa. Experts warn that non-participation could marginalize Canada’s role in NORAD, the binational command responsible for North American aerospace defense, potentially forcing greater U.S. unilateral operations over Canadian airspace.

Pursuing Domestic and Allied Alternatives

In response to these pressures, the Carney government has rolled out a comprehensive Defence Industrial Strategy aimed at bolstering sovereign capabilities. The plan envisions billions in additional spending to foster Canadian defense manufacturing, targeting high-value sectors such as quantum technologies, artificial intelligence, and critical minerals. Officials project hundreds of thousands of jobs and a marked increase in domestic content for military contracts.

This “build, partner, buy” approach prioritizes homegrown solutions while seeking diversified partnerships. Canada recently formalized participation in the European Union’s Security Action for Europe (SAFE) program, becoming the only non-European member of this major defense financing initiative. Collaborations with EU nations and Sweden are seen as pathways to advanced systems without over-dependence on U.S. suppliers.

While cooperation with China remains highly unlikely given geopolitical realities and security concerns, the broader push reflects a strategic reorientation toward resilience and autonomy in an era of transactional alliances.

Implications for Bilateral Relations and Global Security

The potential realignment carries profound implications. For the United States, a scaled-back Canadian role in programs like the F-35 and Golden Dome could disrupt integrated supply chains, industrial participation, and interoperability within NORAD. Estimates of U.S. losses in the tens of billions underscore the economic stakes.

For Canada, the shift represents both risk and opportunity: asserting greater sovereignty amid Arctic challenges from warming waters and increased foreign activity, while navigating the delicate balance of alliance commitments. As trade tensions persist and defense reviews continue, the coming months will likely determine whether this remains a review or evolves into a historic pivot in North American security arrangements.

The debate encapsulates larger questions about alliance dynamics in a multipolar world, where traditional partners reassess dependencies and explore new paths to collective defense.