THE HAGUE — Canada and its NATO allies agreed Wednesday to substantially hike their defence spending target to five per cent of annual GDP by 2035.
Prime Minister Mark Carney endorsed the plan to invest 3.5 per cent of national GDP in core defence needs, plus another 1.5 per cent in related areas, such as infrastructure and cybersecurity.
Here are some key aspects of this week's NATO leaders' summit.
1) A post-Trump review
NATO members will review their spending pledge in 2029. The U.S. Constitution says President Donald Trump ends his term in the first few days of that year.
Carney would not say whether that's why NATO members set the review for 2029. He instead suggested it was a reasonable amount of time, given the need to "ensure that the commitments align with the global security landscape."
A senior Canadian government official who spoke to reporters on background on Wednesday said the review could examine the ratio between core defence spending and funding for related areas.
2) Trump calls the shots
NATO leaders boosted defence spending in part due to the threat of conventional and cyber attacks by Russia. But they were also driven to act by Trump's repeated suggestion that the U.S. might not defend a NATO ally under attack if it hasn't met the spending target — a violation of the core NATO commitment to collective defence, known as Article 5.
The president generated even more uncertainty Tuesday when he said his commitment to mutual defence "depends on your definition" of the NATO treaty's guarantee.
On Wednesday, however, after the agreement on five per cent was reached, Trump was asked to clarify his stance on Article 5.
“I stand with it. That’s why I’m here,” Trump said. “If I didn’t stand with it, I wouldn’t be here.”
NATO Secretary-General Mark Rutte said he had no doubt about the U.S. commitment to NATO's collective defence.
The Canadian official who briefed reporters on background said Trump said nothing to contradict the principle of collective defence during the leaders' meeting.
3) We don't know what counts
Carney said he can't list at this point the weapons and other military equipment Canada will purchase to reach the 3.5 per cent benchmark by 2035.
He said that's because technology keeps evolving and it's not clear how quantum tech will affect future cyber threats.
Carney pointed to the huge role drones have played in Ukraine's defence — weapons that have become more sophisticated even as their costs have dropped.
"The world is changing quite rapidly — we all know that — in terms of the threats, the nature of warfare. And defence is also changing quite rapidly," he said.
4) Build, baby, build
When asked about the 1.5 per cent target for military-adjacent spending, the government official who briefed reporters said it could include projects that have dual commercial and military functions, such as roads.
It could cover major projects such as the Arctic ports Carney wants to build using the fast-track powers in Bill C-5 — legislation that has come in for criticism over its wide scope and the speed at which it passed through the House of Commons.
The official said Ottawa will try to make the case that projects like upgrades to rail infrastructure support national or economic security.
Carney has said work to access critical minerals for allies could count toward the 1.5 per cent target — and so could a lot of other things on which Canada is already spending money.
"We're going to do a more proper accounting of that," he said. "We have to show that, and we have to be deliberate and strategic about it."
5) Canada not the only laggard
Canada isn't the only country under pressure to meet the new NATO spending target.
Spanish Prime Minister Pedro Sánchez claimed on Sunday that Spain had reached a deal with NATO excluding it from the updated spending target.
Slovakian Prime Minister Robert Fico suggested Tuesday that his country might be better off embracing neutrality, saying the new target would amount to an "absolutely absurd" share of his government's spending.
Yet both countries approved the new target, as did Italy, which also had expressed reservations about the new goal.
France, the U.K., the Netherlands and Germany all had committed to the five per cent goal before the meeting, as had NATO members closer to Russia.
Rutte warned Monday that no country can opt out of the target. He said progress made toward the new target will be reviewed in four years.
6) Sacrifices? Not yet
Earlier this month, as he announced Canada would meet NATO's previous spending target of two per cent, Carney said hitting the target "will require ambition, collaboration and yes, on occasion, sacrifice."
But he changed his message Wednesday. When asked what sacrifices Canada will make, Carney insisted that higher defence spending will spur economic growth.
"We’re not at a trade-off, we’re not at sacrifices in order to do those — these will be net-additive,” he said.
"Those trade-offs happen towards the end of the decade, into the next decade."
7) Back to the future
Canada's defence spending hasn't reached five per cent of GDP since the 1950s.
It hasn't even been above two per cent since 1990, despite the fact that the two per cent target has been the NATO standard since 2014.
NATO estimates that Canada spent $41 billion in 2024 on defence, or 1.37 per cent of GDP. In 2014, Canada spent $20.1 billion, or 1.01 per cent of GDP, on defence.
Carney has said that five per cent of GDP would mean a $150 billion defence budget for Canada.
Not everyone loves the focus on the spending target. "The metric is stupid," Canada's former ambassador to NATO Kerry Buck told a panel on June 4, calling it "a club to bash you over the head."
She said the target "carries a lot of political weight" but shouldn't distract from the need to invest in Canada's defence by spending on both the military and diplomacy.
This report by The Canadian Press was first published June 25, 2025.
Catherine Morrison and Dylan Robertson, The Canadian Press
