Prime Minister Mark Carney makes an announcement at HMC Dockyard in Halifax on Monday.Darren Calabrese/The Canadian Press
The Canadian government has picked Germany’s TKMS to build this country’s first significant submarine fleet, siding with NATO allies and Europe over Asian defence contractor Hanwha.
Prime Minister Mark Carney announced the decision in Halifax Monday, bringing an end to a closely fought campaign over the last 10 months that saw both South Korea and Germany outbidding each other in terms of the economic benefits they would bring to Canada.
Mr. Carney, who unveiled the news before flying to a NATO leaders’ summit in Turkey, said the sub purchase will be the largest defence procurement in Canadian history.
“These subs will strengthen our defence industrial base, deepen our partnerships with trusted allies, and open new opportunities for Canadian businesses in European supply chains,” the Prime Minister said.
He said the TKMS boats will be fully interoperable with NATO partners, noting the German manufacturer provides submarines to more than one-third of the NATO alliance “and is the leading submarine provider to navies around the world.”
The decision, first reported by the Globe and Mail earlier Monday, means Canada is handing a contract for as many as 12 submarines to Germany’s TKMS, which bid for the contract jointly with Norway. Both countries as well as Canada are members of the North Atlantic Treaty Organization, a Western military alliance that dates back to 1949. South Korea is not a member of NATO.
The Prime Minister said TKMS has pledged to deliver four of the submarines by 2034 by prioritizing Canadian-ordered vessels.
News of the Canadian government’s submarine pick had been closely guarded. Two sources said Ottawa required some staff involved to sign nondisclosure agreements before the announcement. One said it was deemed necessary because of the size of the procurement and the commercially sensitive nature of a deal that affects publicly traded companies. The Globe and Mail is not identifying the sources who were not authorized to speak publicly about the matter.
Shares in TKMS rose as much as 12.9 per cent on advance reporting of the Canadian decision, hitting their highest level in nearly four months.
The decision to go with Germany’s TKMS, first reported earlier Monday by The Globe, is an early step in a long procurement process – one that experts warn could face hitches.
A scale model of a TKMS HDW Class 212CD submarine on display at the Canadian Association of Defence and Security Industries annual trade show in Ottawa on May 27.Justin Tang/The Canadian Press
As with the process for most major procurements, Germany is now the preferred bidder and negotiations for a contract will get under way. Delays are a common feature of defence procurements.
The procurement is ultimately expected to be worth $20-billion to $30-billion for the subs themselves, and as much as $40-billion to $50-billion for operations, maintenance and upgrades.
Mr. Carney declined to reveal the total cost of the contract Monday, noting Ottawa will now be negotiating with TKMS. “We will not negotiate in public so as maintain the strongest possible position for Canada.”
The Prime Minister said he had a “long conversation” with South Korean President Lee Jae Myung this past weekend to inform him of Canada’s choice and said he hopes to deepen ties with the Asian country.
He declined to confirm Canada would ultimately buy 12 submarines, saying Ottawa would purchase “up to 12″and the final number would be resolved through negotiations.
Ottawa said early on that both models of diesel-electric sub would suit its purposes − Hanwha’s KSS-III Batch-II submarine or TKMS’s 212CD model – and that its decision would turn instead on the economic benefits the companies could deliver for Canada.
Canada has chosen Germany's TKMS for its submarine fleet. Here are its existing partnerships
Philippe Lagassé, a professor at Carleton University who researches defence policy, compared defence contracts to renovating a house.
“Contractors will promise you the moon to get you to sign with them. Once you’ve done so, the contractors often don’t show up or finish when they said they would. They become surly and dismissive, and any change you make to the original plan costs far more than should be morally permitted,” he said.
“From the contractors’ perspective, the homeowner is often indecisive, wants extras for free, and is unreasonable about deliverables and expectations,” he said.
“Accordingly, we shouldn’t be surprised if the next decade is a bit bumpy on the submarine front.”
Prof. Lagassé said he believes Germany bested South Korea on technical requirements and economic benefits. “A Europe-oriented Canadian Prime Minister probably didn’t hurt,” he noted.
Mr. Carney has said more than once that Canada is the most European of non-European countries. He signed a 2025 defence pact with the European Union and recently predicted the “rules-based order” will be rebuilt on the continent.
Prime Minister Mark Carney, right, and TKMS CEO Oliver Burkhard, centre, tour a submarine-building facility in Kiel, Germany, in August, 2025.Christinne Muschi/The Canadian Press
Canada’s planned submarine purchase will be transformative for this country’s military might, making this the first time in history that the Royal Canadian Navy will have more than a token presence underwater.
Canada hasn’t purchased unused submarines since the 1960s, during the Cold War, and has never ordered anywhere near 12 at once. Canada currently owns four subs, all of which were purchased second-hand, and only one of which is typically operational.
The Canadian military has said that it needs 12 subs to properly defend the country, based on the assumption that for high readiness only one of every four vessels would be fit to deploy, with others under maintenance or used for training.
The purchase will give Canada three submarines to deploy at any time – stealth machines that will create an ability to deter hostile or rival countries from prowling around the country’s Arctic, or its Pacific and Atlantic coastlines.
Since August, 2025, Hanwha and TKMS – and the countries backing them – have waged a very public campaign to buy their way into Ottawa’s heart.
Opinion: A NATO submarine partner: Why Canada chose Germany
The Carney government, for its part, has taken advantage of this heated rivalry to extract spending promises from bidders that would benefit its Canada-first industrial policy, which seeks to preserve and expand industrial capacity as a defence against U.S. protectionism.
Hanwha has promised more than $70-billion in trade and investment in Canada, and more than 25,000 jobs annually between 2026 and 2044.
TKMS CEO Oliver Burkhard in a statement said the company was proud to “take on the largest single order” in its history and said this marks the start of a “long-term strategic partnership between trusted allies.”
TMKS said Monday its proposal will generate $167-billion in total economic activity across Canada, deliver over $86-billion in economic impact, and create over 650,000 job-years across Canada during the life of the project. A job-year means one job for one year.
The South Korean government did not immediately respond to Monday’s announcement.
South Korea, a global powerhouse in ship construction, has been trying to break into not only Western submarine markets but also to become a major player in the arms market.
Vina Nadjibulla, vice-president of research and strategy at the Asia Pacific Foundation, said while the decision is a disappointment for South Korea it doesn’t represent a spurning of the Indo-Pacific.
“Yes, in this instance, we went with NATO, but it doesn’t mean that everything that we’ve done to deepen defence and security partnerships with Japan, South Korea, Australia and the Philippines, as part of the Indo-Pacific Strategy now can be just thrown away or is not working right,” she said.
Ms. Nadjibulla said Hanwha’s campaign succeeded in putting South Korea’s defence-industrial strength “on the Canadian radar in a way we had not seen before.” It “introduced many Canadians to South Korea not only as a trade, energy and technology partner, but as a serious defence-industrial player.”
She said the risk is Canada treats the South Korea opportunity “as a procurement story that ended in Halifax.” It should instead treat it as the beginning of a broader defence-industrial partnership, Ms. Nadjibulla said. There are still important opportunities in shipbuilding, armoured vehicles, munitions, critical minerals, energy and clean technology, among others, she said.
With a report from Lindsay Jones in Halifax