Canada's 2025 defence outlook

How the recent American election, and the looming Canadian one, may shape defence policy this year

2024 saw a number of interesting Canadian defence developments. Last April, the Liberal government unveiled their long-awaited defence policy update: Our North, Strong and Free. The policy announced an Arctic pivot of sorts, along with new investments and a series of exploratory capabilities. At the NATO summit in July, Prime Minister Trudeau announced that Canada would finally reach the alliance’s 2% of Gross Domestic Product (GDP) spending target…in 2032. In September, the government sent out a Request for Information to kick start the Canadian Patrol Submarine Project (CPSP). And toward the end of the year, defence minister Bill Blair indicated that he thinks Canada can reach the 2% spending target faster. For those who missed it, Justin Massie and I had a few suggestions to that effect in the Globe recently.

What should Canadian defence observers expect to see in 2025? Here are three things that come to mind.

1) A Trump Riposte

President-elect Donald Trump has made it clear he wants allies to spend more on defence. He’ll likely tell NATO members that 2% isn’t enough; he’s reportedly been musing that he wants to see closer to 5%.

Will Canada promise to spend 2% or more ASAP to appease the returning President? I’m not sure. This may be one file where Ottawa tries to convince Trump that we can only get there if the United States helps rather than hinders us. We’ve already seen hints of this from Blair. He recently noted that getting Canada to 2% faster would require getting our foreign military sales (FMS) cases through Congress faster.

More broadly, Canada could use defence spending to counter Trump’s tariff threat. Put simply, Ottawa could tell the Trump administration that we won’t be able to spend more on defence if a 25% tariff wrecks our economy. Frankly, the Canadian public’s appetite for a big defence spending boost may be diminished if Canada is thrown into a recession by our largest ally and trading partner. If there’s no guarantee that reaching the 2% target will bring an end to the tariffs, or if the defence spending goalposts keep getting moved to justify keeping them, Canadians may sour on billions more for the military, as may the government, regardless of which party is in power.

2) Election Promises

There will be a general election in Canada in 2025. Right now it looks like it’ll happen sooner rather than later, but that may depend on a number of factors, such as a possible Liberal leadership campaign, a prorogation, and what Jagmeet Singh’s horoscope says.

Whenever the election happens, it will probably be one of the few times defence features somewhat prominently in the parties’ electoral platforms.

The Liberals are likely to run on their record, notably the large scale recapitalization of the military they launched in 2017, the modernization of the binational North American Aerospace Defense Command, and the above mentioned pledges and moves they made in 2024. Based on what we’ve seen so far, the Liberals are likely to argue that they’re the ones reinvesting the military, after the last Conservative government allowed defence spending to fall to 1% of GDP.

The Conservatives recently indicated that they’ll match the Liberal’s defence spending ambitions. This presumably means that they’ll also try to get to 2% of GDP by at least 2032. To contrast themselves with the Liberals, the Conservatives will probably point out that the Trudeau government allowed military readiness to slip and failed to adequately deal with the personnel crisis facing the Canadian Armed Forces (CAF). The Conservative may also pledge to cut bureaucracy procurement.

Above all, though, I expect that the Conservatives will focus on ridding the military of ‘wokeness’. This has been a consistent theme when the Conservatives talk about the military, and changing policies around dress codes and personal expression are fairly easy to achieve in the short-term. We should further expect the Conservatives to re-emphasize the military as a core part of Canadian identity and patriotism.

3) Procurement Progress

Finally, 2025 should see procurement files advance. The timing of the election may get in the way of contracts being signed, but there will be pressure to get moving on getting new capabilities quickly after a new Parliament is summoned. In the past, new governments have tended to review their predecessors procurement decisions and insist on going back over project and contracts that were on the cusp of being approved. I suspect things will be different this time. Whether the existing government stays in power or a new Conservative government is formed, the Prime Minister and Cabinet will want to show that reequipping the CAF is a priority. That reduces the likelihood that existing projects will be frozen while a new government does their own due diligence.

CPSP should make more progress in 2025. The defence department and armed forces will probably start setting up one-on-one meetings with suppliers based on their responses to the September 2024 RFP. Given the ambitious timeline that the Royal Canadian Navy has for the CPSP contract award, defence observers should be on the lookout for any slippage or delays.

Defence procurement reforms could be introduced in 2025, too. The government has been reviewing the procurement process for a couple of years now. That could bear fruit soon, though it’ll be affected by the timing of the election as well.

Happy New Year!