2025 was a big year in Canadian defence. A new Liberal ministry headed by Prime Minister Mark Carney pledged to immediately meet NATO’s 2% of GDP defence spending target, and to eventually get up to 5%. A new Defence Investment Agency (DIA) was stood up. Contracts were signed for new capabilities, including an over the horizon radar for the Arctic, a polar communications satellite, and replacements for the decrepit Challenger fleet. Canada also joined the European SAFE initiative. Most importantly, the Prime Minister told us that Canada’s old security and defence relationship with the United States was over and that we’ll be building and buying more at home.
What should we be looking out for in 2026? Here are a few things I’ll be keeping an eye on.
Defence Industrial Strategy
We were told that the government’s Defence Industrial Strategy (DIS) would be released by the end of 2025. It didn’t happen. Cynics may wonder if the document will suffer the same fate as the long-awaited national security strategy, i.e. much discussed at first, then slowly slipping into the bureaucratic void.
My guess is that the government will release the DIS in the next few weeks or months. The scuttlebutt is that there’s disagreement about some wording, notably around sovereignty and what counts as a Canadian company as part of the government’s Buy Canadian procurement policy. As Secretary of State Fuhr hinted at recently, the Buy Canadian policy will probably be more akin to Buy Canadian-ish; international firms with a big Canadian presence will be maple washed to simplify the acquisition of critical American and European capabilities. That kind of thing probably needs to be ironed out before the DIS is released.
Fighter review
The review of Canada’s F-35 purchase will soon have dragged on for a year. This is likely the result of a tug of war between various ministers and departments over what should be prioritized. My guess is that the government is having to weigh the impact of a mixed fleet on the RCAF with Saab’s promise of mega jobs in Ontario and Quebec. A lot will rest on whether the job numbers being floated around are plausible, and whether the F-35 is seen as a bargaining chip in the ongoing Canada-United States trade battle.
For the sake of everybody involved, let’s hope that the government decides on a single or mixed fleet, or future crewed/uncrewed approach, sooner rather than later. If Ottawa can’t make this kind of call in relatively short order, it doesn’t bode well for equally tough decisions we’ll soon face.
Submarines
By the end of 2026, the Carney government will likely have decided which company, Hanwha or TKMS, has won the submarine contract. Once a choice has been made, expect officials to insist that it’s tentative, pending a successful negotiation of a contract that will cement key details, such as delivery timelines, training cooperation, in-service support, and wider economic benefits. Stating that the winner is merely tentative will give Ottawa leverage as it extracts firm commitments from the Germans or South Koreans.
Either way, once a submarine has been chosen, Ottawa will be confronted with the far, far tougher challenge of getting Canada ready to operate the boats.
Airborne Early Warning & Control
We still don’t have a real sense of where the Carney government is headed on AEWC. The acquisition of Bombardier Global 6500s to replace the Challengers would appear to favour that airframe for a future AEWC capability, as is the news that the RCAF will be working with Bombardier to integrate an air-to-air refuelling capability on the 6500s.
There’s another way of looking at things, though. The 6500 buy could be a consolation prize for Bombardier as the government lays the groundwork for an E-7 Wedgetail sole source or a competition tilted in favour of that Boeing plane. Defence minister McGuinty’s comments about Canada “moving in lockstep” with the US on continental defence, the common Boeing 737 airframe between the E-7 and the P-8As Canada is buying, and Fuhr’s musings that foreign companies like Boeing could be treated as Canadian, suggest that Bombardier isn’t guaranteed a win here.
Digital infrastructure
We should expect some urgency on building a digital infrastructure for DND/CAF and CSE in 2026. This capability was specifically flagged in the 2025 budget and allocated approximately $11 billion. Ottawa really needs to get moving on this file, since Canada is way behind on all things secure digital. The big question looming over this initiative is whether this digital infrastructure will be entirely Canadian. I honestly don’t know. My hunch is that it will involve one of the big American service providers, but I’m happy to be wrong. Although this is purely speculative, I wonder if there’s a connection between this project and Microsoft’s announcement that it’s investing $19 billion to build digital and AI infrastructure in Canada.
Empowering the Defence Investment Agency
The DIA is currently a special operating agency under Public Services and Procurement Canada. As far as I can tell, the DIA is therefore working with and within PSPC’s procurement authorities, with a limited ability to formally influence decisions at DND/CAF and at Innovation, Science and Economic Development Canada (ISED). This will need to change for the DIA to live up to its true potential. DIA will need to have a broader set of authorities for defence procurement, including in areas that currently fall under the authorities of the defence and industry departments. I hope we see legislation or regulations that further empower DIA in 2026.
The United States
Do you know what the Carney government actually thinks about the future of Canada-United States relations? I sure don’t. Sometimes you’ll hear the Prime Minister or various ministers muse about building more sovereign capability, diversifying our partnerships, and being less dependent on the United States. Other times, you’ll hear that Canada is all in on the Golden Dome, fully committed to the Canada-United States defence relationship, and merrily announcing the acquisition of additional American capabilities.
To be honest, I’ve given up trying to figure out what direction the government is taking. The patriot in me wants us to be more self-sufficient and better able to resist what looks like a determination to vassalize us. My analytic side tells me that Canada will run right back to the United States once the Trump presidency is over or we’re able to negotiate a comprehensive deal on security and trade. Maybe the government is having the same internal debate. It certainly feels that way. Regardless, it’ll be interesting to see what this year’s defence developments tell us about where Canada-United States relations are headed.
It seems to me that the Ukraine/Russia war has demonstrated a revolutionary change in "conventional " warfare. That means the decision around manned/unmanned tactical weapons delivery is as important to Canada Forces as is the decision around energy evolution is to the O & G industry …
And our military leader's symbiotic relationship with the US department of War makes it even more difficult than it should be.
Philippe, your skepticism about 2026 feels spot on. Bold pledges are one thing, but execution is another.
The government's June 2025 announcement did commit over $9 billion in new spending to accelerate toward the NATO 2% target. Still, as you note, bureaucratic hurdles and internal debates often push decisions on fighters, subs, and the industrial strategy into delays. Spending ramps up, but capabilities lag behind. Fair assessment.