Canada hit NATO’s 2 percent target — but hold the applause for now

Late last month, standing on the deck of a Royal Canadian Navy warship in Halifax, Prime Minister Mark Carney announced something his predecessors had promised for a decade but never delivered. Canada has finally reached NATO’s 2 percent GDP defense spending target — the highest level of investment relative to the size of the nation’s economy since the fall of the Berlin Wall.

After years of internal and U.S. pressure — House Speaker Mike Johnson (R-La.) calling Canada “shameful,” a bipartisan group of 23 senators warning that Ottawa was failing its alliance obligations, leaked Pentagon documents suggesting Canada had privately given up on the goal entirely — the achievement is real. Carney was right to mark it. 

But Washington should be careful about what it reads into that number.

The $63 billion figure Ottawa is citing is a whole-of-government total. It folds in Veterans Affairs benefits, Canadian Coast Guard operations and other expenditures with limited relevance to military capability. NATO guidelines permit some flexibility in how members count their contributions, and Canada isn’t technically cheating. But there is a meaningful difference between what a country counts and what it can put in the field when it matters. 

The procurement problems are harder to dismiss. Canada still doesn’t have new submarines. It still doesn’t have new armored vehicles or new warships. The F-35 contract was signed, but the Carney government has put the full 88-jet order under review — and even if it proceeds, deliveries are years away. The 88 fighters, the P-8 maritime patrol aircraft, the NORAD modernization — these are contracts and commitments, not fielded capabilities. 

The Victoria-class submarines Canada operates today were bought secondhand from Britain in the late 1990s; the youngest of the four is now more than 30 years old. The River-class destroyer program, meant to replace the navy’s aging frigates, broke ground in 2024 after more than a decade of delays — but the first ship won’t be in service until the early 2030s. 

On the day of Carney’s announcement, conservative defense critic James Bezan noted that spending $18 billion more than last year matters only if it eventually produces something a soldier, sailor or pilot can actually use. Canadian defense procurement has historically been among the slowest in the alliance, a problem rooted less in political will than in institutional dysfunction. The newly created Defense Investment Agency has not yet shown that it can change that. For members of Congress tracking NORAD modernization, that lag is worth keeping in mind. 

Then there is the question of where Canada goes from here. Having hit 2 percent, it has committed — along with the rest of the alliance — to reaching 5 percent of GDP by 2035. For Canada, that means roughly $150 billion per year. Nothing in the current fiscal framework comes close to supporting that number. 

A recent CD Howe Institute report puts the problem plainly: Canada’s federal government has no credible plan for getting there. The most recent federal budget contained no five-year projection for defense spending. Carney has acknowledged that trade-offs will come later in the decade and that the spending will require social license from Canadians — which is another way of saying the money isn’t yet committed. 

A pledge without a budget line is not a strategy. 

The stakes are clearest in the Arctic, where Canada’s choices matter most to Washington. The Carney government has framed its $32 billion NORAD modernization program as a move away from dependence on the United States for Arctic defense — building sovereign capability that doesn’t rest on American goodwill. That shift is overdue. Moscow has spent years building-out military infrastructure across its Arctic territory. Beijing, despite having no Arctic coastline, keeps pouring resources into the region and now describes itself as a near-Arctic power. The northern approaches to North America are no longer empty space. 

None of which is lost on Trump. His annexation rhetoric may be many things, but at minimum it is a signal that Canada cannot plan its defense around assumptions of unconditional American partnership. The bilateral relationship has shifted in ways Ottawa is still absorbing. An ally that proclaims Arctic sovereignty but cannot sustain a consistent presence across its own northern territory will find that claim tested — by Moscow and Beijing first, but increasingly by Washington as well. 

The sensors, the infrastructure and the forces required to back any of this up are still years from delivery. Canada is declaring a sovereignty it cannot yet enforce. 

So, the question Washington should be asking is a simple one: Will Canada’s defense surge produce real capability, or mostly promises? The strategic environment is not going to wait around for an answer. 

Canada has earned one cheer. The second one waits for the submarines.

Andrew Latham is a professor of international relations at Macalester College in Saint Paul, Minn., a senior fellow at the Institute for Peace and Diplomacy, and a non-resident fellow at Defense Priorities in Washington.

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