Canada has unveiled one of the most consequential shifts in its modern defense policy, signaling a decisive turn inward after decades of deep integration with the United States military-industrial base. Prime Minister Mark Carney’s government has launched a C$6.6-billion Defence Industrial Strategy designed to prioritize domestic production, reduce foreign dependence, and reshape how the country equips its armed forces.

At the core of the initiative is a sweeping procurement target: directing roughly 70% of defense contracts to Canadian firms within the next decade, up from about 50% today. Officials say the shift could generate a multibillion-dollar annual revenue boost for local manufacturers while supporting an estimated 125,000 jobs nationwide. The policy follows a “build-partner-buy” model — prioritizing domestic production first, allied collaboration second, and foreign purchases only when necessary.

The move reflects mounting unease in Ottawa over long-standing reliance on U.S. defense suppliers. Canadian leaders have noted that a significant share of military capital spending — in some years the majority — has flowed south of the border. By strengthening sovereign manufacturing capacity, policymakers argue Canada can better protect Arctic interests, secure supply chains, and meet NATO spending commitments in an era of geopolitical volatility.

Yet the pivot carries strategic risks. Canada’s defense sector remains comparatively small, employing about 81,000 workers and contributing less than 1% of national GDP. Scaling domestic production fast enough to replace advanced U.S. systems — from fighter jets to missile defense — could prove costly and technologically challenging. Existing contracts, including the planned acquisition of U.S.-built F-35 fighters, are already under review as Ottawa weighs alternatives and co-production deals with other allies.

The shift also reverberates diplomatically. For decades, bilateral agreements like the Defence Production Sharing framework tightly integrated U.S. and Canadian defense industries. A protectionist procurement tilt could strain that legacy — even as Canada expands partnerships with Europe and Indo-Pacific suppliers.

Whether Carney’s strategy proves a sovereignty milestone or a capability gamble will depend on execution. What is clear is that North America’s most seamless defense partnership is entering a period of recalibration — one measured not in rhetoric, but in contracts, factories, and the future balance of continental security.