Rank #16 · Americas
Canada spent $37.5B on defence in 2025 (1.6% of GDP on SIPRI methodology) — below the NATO 2% target despite a 23% real-terms jump driven by the 2024 Our North, Strong and Free policy, F-35 procurement, NORAD modernisation, and the Canadian Surface Combatant programme.
Canada's 2025 increase reflects accumulating obligations from the 2017 Strong, Secure, Engaged policy and the 2024 update Our North, Strong and Free. Major capital programmes — F-35A acquisition (88 aircraft, first deliveries 2026), the Canadian Surface Combatant (CSC, 15 Type 26 derivatives), the P-8A Poseidon CMMA fleet, and NORAD modernisation (~CAD 38B over 20 years) — are scaling up simultaneously, pushing capital obligations sharply higher. Personnel costs are growing despite a manning shortfall, due to compensation reform. The government has stated a path to NATO 2% by 2032 (NATO methodology). Canada faced public US pressure throughout 2025 to accelerate the timeline.
The Canadian Armed Forces field about 70,500 regular personnel across the Canadian Army, Royal Canadian Navy, and Royal Canadian Air Force, plus a 30,500-strong reserve. The Army is structured around three mechanised brigade groups (1, 2, 5 CMBG) with Leopard 2A4M/A6M tanks, LAV 6.0, and M777 howitzers. The RCN operates 12 Halifax-class frigates undergoing life-extension pending CSC arrivals (2030s+) and four Victoria-class submarines (with the Canadian Patrol Submarine Project for replacement now formalised). The RCAF flies CF-18 Hornets transitioning to F-35A, with first F-35A deliveries to Canadian crews in late 2026. Forward deployments include leadership of the NATO eFP Latvia battlegroup (now a multinational brigade) and Operation Reassurance.
Canada's defence industrial base is mid-sized but technologically advanced, anchored by simulation/training (CAE), shipbuilding (Irving for combatants, Seaspan for non-combatants under the National Shipbuilding Strategy), and armoured vehicles (GDLS Canada in London, Ontario, builder of the LAV family for export). Lockheed Martin Canada handles combat systems integration (CSC). Canada is a Tier-1 industrial participant in the F-35 program and a Five Eyes ISR partner. Aerospace strength includes Bombardier (Global 6500 for the CMMA replacement was bypassed in favour of P-8A), Pratt & Whitney Canada, and CAE's training systems. Defence exports are modest relative to economic size.
Canada has no active combat operations but is forward-deployed in Latvia (multinational brigade lead), Eastern Europe, and the Indo-Pacific (Operation Horizon, including frigate transits of the Taiwan Strait). The Arctic is the dominant emerging strategic concern, with Russian and Chinese probing of NORAD's northern approaches and increased Arctic ice-melt-driven access. NORAD modernisation, jointly funded with the US, includes Arctic Over-the-Horizon Radar (Arctic OTHR) and Polar OTHR systems. Canada also contributes to NATO Standing Maritime Group operations and Operation Artemis (Arabian Sea/Indian Ocean). No nuclear weapons; relies on US extended deterrence.
On 27 April 2026, SIPRI confirmed Canada's 2025 spend at $37.5B (1.6% GDP, SIPRI methodology), 23% higher in real terms. The Canadian Patrol Submarine Project moved into the down-select phase in late 2025. The first Canadian F-35A pilot conversion training began at Luke AFB in 2025; first Canadian-based F-35A acceptance is expected at 4 Wing Cold Lake in late 2026. NORAD Arctic Over-the-Horizon Radar contracts were placed with Raytheon Canada Limited in 2025. In June 2025 Canada endorsed the new NATO 5%-by-2035 target. The first CSC steel-cut ceremony at Halifax Shipyard was held in mid-2024 with construction continuing through 2025-2026.
No — SIPRI puts Canada's 2025 burden at 1.6% of GDP. NATO's own methodology figure is somewhat higher. Ottawa has committed to reaching NATO 2% by 2032 under the 2024 policy update Our North, Strong and Free, with a longer path to the new 5% target.
The F-35A Lightning II — 88 aircraft selected in 2023 to replace the CF-18 fleet. First Canadian crew training began at Luke AFB in 2025. First aircraft are expected at 4 Wing Cold Lake in late 2026, with full operational capability later in the decade.
Roughly 70,500 regular personnel (against an authorised 71,500) plus ~30,500 reserves. The Canadian Armed Forces have run a persistent recruiting shortfall, which has been a primary driver of the 2024 retention/recruitment reforms and the policy update Our North, Strong and Free.
A 15-ship programme to replace the Halifax-class frigates and the retired Iroquois-class destroyers, based on the BAE Type 26 design with combat systems integration by Lockheed Martin Canada. First steel was cut at Irving Shipbuilding in 2024; first ship is targeted for delivery in the early 2030s.