NATO said Thursday that Canada’s military spending has finally hit the alliance’s target of 2 per cent of gross domestic product, a benchmark set by members more than a decade ago.
It’s a long-overdue accomplishment for Canada, which has lagged a NATO alliance spending threshold conceived by members in 2006 and then confirmed in 2014.
The federal government’s spending for the 2025-26 fiscal year represents the first time in roughly 35 years that Canada has devoted 2 per cent of its GDP to defence. The last time was the end of the Cold War.
The North Atlantic Treaty Organization issued a report Thursday on military spending among 32 member countries. It stated that Canada is spending more than $63-billion annually on defence – up more than 65 per cent since 2014.
“All allies reported defence-expenditure figures that met or went beyond the 2-per-cent target first set in 2014, with many making steep increases in spending.”
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It’s a significant change from less than two years ago when Justin Trudeau, the prime minister at the time, disparaged the NATO target as a “crass mathematical calculation” and said Canada couldn’t reach it until as late as 2032.
Prime Minister Mark Carney’s military spending push is far from over. Last June, NATO leaders pledged a new defence-spending target that would require expenditures to rise further, to equal 3.5 per cent of GDP. That will require tens of billions in additional defence spending yearly.
Member countries also pledged more spending equal to 1.5-per-cent of GDP on security- and defence-related infrastructure that would have a dual civilian and military purpose, such as bridges, ports and roads, as well as cybersecurity and measures to protect energy pipelines.
Mr. Carney has said existing spending plans will cover this second commitment, which would bring total defence-related spending to 5 per cent of GDP by 2035.
The impetus to hike spending and rapidly meet the earlier 2-per-cent NATO benchmark came when Mr. Carney took office in 2025. Canada faced fresh accusations from U.S. President Donald Trump that Canadians were not shouldering enough of the defence burden.
The Prime Minister, saying that Canada could no longer rely on the United States for protection, used his first budget last November to deliver a defence-spending increase of more than $84-billion over five years – believed to be the biggest short-term cash infusion for the military since the Korean War.
Canadian soldiers patrol past one of the satellite relay domes of the NORAD Shingle Point North Warning System facility in Yukon in March, 2025.Gavin John/The Globe and Mail
Mr. Carney marked the 2-per-cent NATO milestone on Thursday in Halifax, where he announced $3-billion in infrastructure upgrades for Canadian Armed Forces bases. The money comes from the 2025 budget and earlier fiscal plans.
The Prime Minister said Canada’s defence spending as a percentage of the country’s economic output is now the highest “since the fall of the Berlin Wall.”
He said the increased spending is part of his government’s effort to “control our own destiny” and better defend Canadian territory, protect its borders and boost its sovereignty.
Mr. Carney said that over the next decade, cumulative annual military spending in Canada will add up to “half-a-trillion dollars in defence investment – from submarines and aircraft to drones, sensors, and radar systems."
Separately, the Prime Minister said a decision on which new submarine to buy – either from South Korea or a German-Norwegian partnership – will be made “by the summer,” or by the “end of the second quarter,” which means end of June.
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Thursday’s military funding announcement included more than $1-billion to modernize the heating, electrical and fire protection systems at Halifax-area Forces properties, upward of $640-million to set up hangar and drone infrastructure to support new patrol and reconnaissance aircraft and more than $180-million for a “Combatant Training and Integration Centre” to support the navy’s future river-class destroyers.
It also includes more than $1-billion for infrastructure upgrades at Canadian Forces Base Gagetown.
Defence Minister David McGuinty said in an interview that the NATO announcement is external confirmation that Canada has made good on its commitments to the alliance. The Carney government had promised to hit this target by the end of the fiscal year, which is March 31.
“They, through their own independent third party, validated accounting, are saying to the world: ‘Canada is a fully paid-up member.’ ”
Mr. McGuinty defended the extra spending, which means Canada is forgoing expenditures in other areas.
“The Canadian people have understood that the world has changed,” the Defence Minister said, noting that Iran launched missiles that targeted the remote Indian Ocean island of Diego Garcia, more than 4,000 kilometres away.
“They understand our geography will no longer protect us,” the minister said.
He added: “Canadians know instinctively in their heart of hearts that we had not been investing enough in defence. We had not been investing enough in our women and men of the Canadian Armed Forces.”
Conservative defence critic James Bezan said he was skeptical of the increased defence spending, calling it “creative accounting” and said he doubts it has resulted in increased capabilities for the Canadian Forces. “It has not actually increased our own security or made us safer here at home,” he told reporters.
David Perry, president of the Canadian Global Affairs Institute, said the rapid hike in defence spending under Mr. Carney’s first year – after years of lagging – demonstrates the difference that political will can make.
“It’s a huge accomplishment, done in less than 10 months, and really highlights to me that what was missing was political leadership to put this at the top of the government of Canada’s agenda.”
Canada remains on the lower end of the NATO alliance when it comes to spending as a percentage of GDP. Canada, Spain, Portugal and Albania and Belgium are all registered as spending 2 per cent in the latest NATO report with all other spending slightly more or a lot more. Countries with the steepest spending as a share of GDP include Poland at 4.3 per cent, Lithuania at 4 per cent and Latvia at 3.74 per cent. The United States spends 3.19 per cent, according to the report.