Chrystia Freeland to set aggressive timeline for 2% defence spending by 2027

Liberal leadership hopeful Chrystia Freeland is expected to outline an aggressive plan to reach Canada’s NATO defence spending targets by 2027.

The former finance minister and deputy prime minister is expected to lay out her plan to boost defence spending to two per cent of Canada’s GDP in just two years on Thursday.

A source close to Freeland told Global News Wednesday night that the rapid rollout of new defence spending is required due to the world becoming “increasingly volatile and dangerous,” and that Canada must move quickly to both meet international commitments and defend the country’s sovereignty.

No details were immediately available on how Freeland would accomplish that goal, which would amount to a massive reshaping of Canada’s spending priorities.

Successive Canadian governments – including the current government, for which Freeland held the purse strings until her resignation in December 2024 – have failed to reach NATO’s two per cent spending target.

That has drawn the ire of U.S. President Donald Trump, who has accused Canada – among other NATO allies – of freeloading on American largess and defence power.

According to NATO estimates, Canada currently spent 1.37 per cent of its GDP in 2024, up from 1.01 per cent in 2014 before Prime Minister Justin Trudeau’s Liberals took power.

Last year, Defence Minister Bill Blair outlined a plan for the Canadian government to hit the two per cent target by 2032 amid the ongoing war in Ukraine and increasing instability on the world stage. Mark Carney, the former central banker and Freeland’s main rival to replace Trudeau, said this week that he would accelerate that timeline to reach the target by 2030.

The Parliamentary Budget Office (PBO) estimated Canadian defence spending would have to nearly double from current spending levels to reach the target by 2032-33 – from $41 billion this fiscal year to $81.9 billion seven years from now.

Defence is an unusually hot topic in Canadian politics right now as Trump has repeatedly cited lackluster Canadian defence spending as a grievance and justification for suggesting annexing Canada and imposing tariffs.

On Sunday, a White House press release that tied tariff threats to complaints about Canada’s defence spending and raised questions about the North American Aerospace Defence (NORAD) Command for the first time raised concerns in the Canadian defence and security world. NORAD has long been vital to preserving Canadian security and sovereignty. Any change to the unique binational arrangement could leave Canada unable to defend itself, and risk significant damage to Canadian sovereignty as a result.  Without NORAD, the United States could decide to defend Canada on its own terms, without Canada’s control or consent.

Trump has stated he wants the spending target for NATO countries to increase from two per cent to five per cent of GDP. Allied countries have not indicated support for such a steep increase, but several have been publicly suggesting pushing beyond two per cent, leaving Canada as even more of an outlier.

U.K. Prime Minister Keir Starmer is contemplating increasing the U.K.’s defence budget to 2.5 per cent and has met with European allies to encourage them to consider raising their defence spending as well. Last week European Council President Antonio Costa said the 23 EU members that belong to NATO are likely to agree to raise the defence spending target above the current two per cent at the NATO Summit in June. According to NATO’s latest defence expenditure report, 23 of 32 NATO allies were expected to meet the two per cent spending target.

Trending Now

The Trump administration is not the first American government to register frustration with what U.S. leaders view as inadequate defence spending. Both the Obama and Biden administrations raised concerns about Canada’s dollar commitment to defence repeatedly in public and private. The most recent U.S. ambassador to Canada under the Biden administration, David Cohen, expressed frustration last year, saying “at the end of 2024, the way projections are looking, Canada will be the only country in NATO that is not spending at least two per cent of its GDP on defence and does not have a plan to get there.” Cohen stated that “Canada has moved within NATO from being a bit of an outlier to being the outlier in the entire alliance.”

Defence and security experts say any acceleration in defence spending, and likely even hitting the government’s current target, will require a radical overhaul of how much money is allotted to national defence, and how the Canadian Armed Forces procures equipment — a notoriously sclerotic and complicated process that averages seven to 10 years a project.

The timeline on Freeland’s plan is aggressive, but last week Defence Minister Bill Blair stated in the media that he thought it was achievable to hit two per cent by 2027.

In an interview last month, Chief of the Defence Staff Jennie Carignan told Global News plans to accelerate defence spending are already underway. Carignan said the Canadian Armed Forces has been working since last summer with the government on accelerating defence investments, which also include $40 billion for modernizing NORAD, the joint U.S.-Canada defence alliance.

Freeland’s most difficult obstacle may be explaining why she did not commit more money to the military in her years as the Trudeau government’s finance minister.

Trudeau committed to spending two per cent of GDP this past July at the NATO summit after relentless pressure from allies but immediately referred to the commitment as a “crass calculation” and added that “we continually step up and punch above our weight.”