Canada commits to NATO’s 5% GDP target by 2035, with $150 billion price tag and no immediate trade-offs
Canada’s new pledge to spend five percent of GDP on defence by 2035 could cost up to $150bn annually—but Prime Minister Mark Carney says a large portion of that figure overlaps with current federal spending priorities like critical minerals and domestic resilience.
According to Carney in an interview with CNN International, “a little less than a third of that overall number is spending on things that quite frankly we’re already doing to build the resilience of our economy.”
He cited efforts like defending key areas and supporting development of critical minerals as examples.
Carney stated that this investment would “help build our economy as it improves our defence,” adding that “we’re not at a trade-off.”
The breakdown of the NATO target, reported by BNN Bloomberg, allocates 3.5 percent of GDP toward core military needs such as jets and weapons, and the remaining 1.5 percent toward defence-related infrastructure.
Canada signed onto the target—along with all NATO allies except Spain—at the alliance’s leaders’ summit in The Hague, with a review scheduled for 2029.
Carney told CNN that reaching the full target by 2035 will be “a lot of money,” but stressed that some of the costs are already covered by existing or planned measures.
He did not offer an estimate for what the 3.5 percent core military spending portion would look like in 2035, citing the unpredictable threat environment.
“We should spend for the environment, not for what could be an arbitrary number,” he said.
Earlier this month, Carney announced a $9.3bn increase to Canada’s military budget, bringing total defence spending this fiscal year to approximately $62bn, as per BNN Bloomberg.
This marks the first time Canada will meet NATO’s earlier two percent GDP target, first promised in 2014 but never fulfilled until now.
According to the CBC, to meet the new 3.5 percent direct military spending target, Ottawa would need to find an additional $45bn to $50bn annually.
Carney told CNN that the rest—about $50bn for infrastructure and economic resilience—aligns with spending already in place or in the pipeline.
Despite the steep cost, Carney reaffirmed his plan to balance the operational budget in three years.
“We’ll grow this economy. We’ll balance our operational budget in three years. That’s our commitment,” he said, while also pledging continued investment in the defence industry.
Foreign Affairs Minister Anita Anand, speaking before the CNN interview aired, said Canada has consistently aligned with NATO priorities and that “the question really is the timeline.”
Carney said allies are working with a 10-year horizon.
NATO Secretary General Mark Rutte stated at the summit that the five percent pledge would make the alliance “much stronger” and “a fairer alliance with Europe and Canada stepping up.”
As per CBC reporting, Rutte added that current contributions are no longer sufficient: “With the two per cent, we simply cannot go and defend ourselves.”
US President Donald Trump, who has repeatedly pushed allies to boost defence spending, called the move a “big win” and said NATO would become “very strong with us.”
Rutte acknowledged Trump’s role in driving the commitment, noting that “Trump has been clear. America is committed to NATO. He affirmed it again today in no uncertain terms.”
Some allies expressed hesitation.
Belgium’s Prime Minister Bart De Wever told Canadian journalists that he was “not comfortable at all with the five per cent figure,” adding that tripling defence budgets would be necessary to meet the 3.5 percent target. “We’re more or less in the same situation as Canada,” he said.
Conservative defence critic James Bezan told CTV News Channel that he is looking for transparency and assurance that Ottawa is not relying on “creative accounting.”
“We just don’t need to waste money. We actually want to see this invested in capabilities,” he said. He also called for a budget, stating, “we need to know where this money is coming from.”
No budget was tabled before Parliament adjourned for the summer.
Carney has said one will be introduced this fall.
Parliamentary Budget Officer Yves Giroux told CTV’s Power Play that the $9.3bn increase this year “does track from a fiscal perspective,” though future amounts will likely rise due to inflation and GDP growth.
“Eventually the number might have to be much bigger,” he said. “It’s not the amounts allocated to defence, it’s the amounts that actually get spent on defence that matters for NATO.”
Veteran Canadian diplomat Senator Peter Boehm told CBC News that the five percent goal may be unavoidable given the current geopolitical environment.
However, he warned that Canada’s long-standing procurement inefficiencies would make hitting the target difficult: “It will require creativity to achieve those percentage goals.”
Kurt Volker, former US ambassador to NATO, told the Center for European Policy Analysis that Washington’s priority is clear: “We have a plan. Five per cent is real. We’re going to get there. We have a real threat in Europe. We have to do more.”
According to NATO estimates reported by BNN Bloomberg, the US spent 3.38 percent of its GDP on defence last year—accounting for two-thirds of NATO’s total military expenditures.
