For more than 70 years, Canada quietly sent nearly three-quarters of every defense dollar south of the border. That era has now ended. In a move that stunned Washington and rattled U.S. defense giants, Canada unveiled a sweeping $180 billion defense industrial strategy designed to slash reliance on American weapons and rebuild military power at home. The announcement marks one of the most consequential shifts in North American defense relations since the creation of NATO.
Standing before defense executives in Montreal, Mark Carney laid out a blunt new doctrine: build domestically first, partner with trusted allies second, and buy from foreign suppliers only as a last resort. The target is clear and aggressive—by 2035, 70% of Canada’s defense contracts will go to Canadian firms, up from just 43% today. That change alone redirects tens of billions of dollars away from the United States.
The financial impact is staggering. Canada currently spends about $15 billion annually on defense procurement, with roughly 75% flowing to U.S. contractors. Under the new framework, American firms could see their share collapse to as little as 15%. Over a decade, that translates into an estimated $90 billion revenue loss for companies long accustomed to treating Canada as a guaranteed customer.
Beyond the numbers lies a deeper strategic break. The plan identifies ten “sovereign capabilities” that Canada must control at home, including Arctic surveillance, cyber defense, military AI, and critical naval systems. Selected national champions will receive long-term contracts, research funding, and protection from foreign takeovers, ensuring that intellectual property, production, and jobs remain inside Canada.
The ripple effects extend well beyond Ottawa. U.S. defense supply chains in states like Texas, Ohio, Michigan, and California were built around steady Canadian orders. While existing contracts will run their course, renewals are no longer assured. Aircraft, missile, and armored vehicle programs that once counted on Canadian demand now face a far more competitive and uncertain future.
This shift also exposes a direct collision with Donald Trump’s “America First” arms strategy. While Washington seeks to lock allies into U.S. weapons ecosystems, Canada is deliberately making the United States a supplier of last resort. What Trump viewed as leverage—tariffs, threats, and pressure—ultimately accelerated Ottawa’s decision to invest in autonomy instead of dependence.
Crucially, Canada is not turning inward. As U.S. purchases decline, partnerships with Europe are expanding. Joint development with countries like Sweden and the United Kingdom offers technology transfer and local manufacturing, something American contractors have rarely provided. Defense spending is being reframed as national investment, expected to create 125,000 direct jobs by 2035 and fuel growth in advanced manufacturing, AI, and materials science.
The long-term implications are profound. Strategic autonomy means Canada can defend its Arctic interests, sustain its military, and disagree with Washington without fearing supply cutoffs or political retaliation. If successful, the model could inspire other U.S. allies to follow suit, compounding pressure on American defense exports worldwide.
Seventy-five cents of every Canadian defense dollar once went automatically to the United States. Not anymore. What replaces it is a Canada determined to decide its security, partnerships, and priorities on its own terms—leaving Washington with fewer cards to play and a transformed balance of power in North America.
