Prime Minister Mark Carney announced March 26 that Canada has achieved NATO's 2% defense spending target—five years ahead of the previous government's timeline and under significant pressure from the United States to increase military contributions to the transatlantic alliance.
The milestone, detailed in a government statement, comes after Canada increased defense expenditure by more than $63 billion over ten months, representing what officials described as the largest year-over-year defense spending increase in generations. Canada's defense budget had languished at approximately 1.3% of GDP for years, making the country a frequent target of criticism from NATO partners, particularly during the Trump administration.
What 2% Means for Canada
For context, Canada's GDP in 2025 was approximately $2.3 trillion. Reaching 2% defense spending therefore requires approximately $46 billion annually—a substantial increase from the roughly $30 billion budgeted in 2024. The Carney government, elected in January 2026, made defense spending a priority, coordinating across multiple federal departments to accelerate procurement and infrastructure projects.
The announcement includes specific investments that illustrate where the money is flowing. Over $3 billion will be spent in Atlantic Canada alone, including $1.2 billion for modernization of CFB Halifax Dockyard—Canada's principal naval base—and $648 million for aviation support facilities at 14 Wing Greenwood. An additional $1 billion goes to CFB Gagetown training infrastructure, addressing longstanding deficiencies in facilities that train Canadian Army units.
But the government's statement also looks forward, committing to $500 billion in defense spending over the next decade and targeting NATO's emerging 3.5% guideline by 2035. That more ambitious target, still under discussion within the alliance, reflects assessments that the 2% benchmark—established in 2014—no longer adequately addresses the security environment given Russia's war in Ukraine and increasing tensions with .
