TORONTO — Canada has reached NATO’s defence spending benchmark of 2% of gross domestic product for the first time since the target was set in 2014, according to the alliance’s latest annual report.NATO data shows Canada spent more than $60 billion on defence in 2025, equivalent to 2.01% of GDP. The milestone follows more than a decade of gradual increases in military spending.Prime Minister Mark Carney is expected to mark the development during a visit to Halifax, where he is touring a Royal Canadian Navy frigate. While Canada’s fiscal year ends March 31, spending figures were submitted to NATO earlier.The report also indicates all 32 NATO member states have now met the 2% guideline established at the 2014 Wales Summit.Canada had previously fallen short of the target. In 2024, the country spent 1.47% of GDP on defence and was among 11 alliance members not meeting the benchmark.Pressure to increase military spending intensified in recent years, including during the presidency of Donald Trump. During his first term, Trump repeatedly raised the possibility of reducing U.S. support for NATO if allies did not meet spending commitments. During his 2024 campaign, he also suggested the U.S. might not defend countries that failed to meet targets.The federal government accelerated defence spending amid shifting geopolitical tensions and strained Canada-U.S. relations.Carney has made increased military investment a central component of his economic and sovereignty agenda, particularly in the Arctic. He set a goal of reaching the 2% target by the end of fiscal 2025 as part of a broader plan to “rebuild, rearm and reinvest” in the Canadian Armed Forces.In June, the government announced an additional $9.3 billion in defence spending to meet the NATO benchmark. Approximately $2 billion was allocated for pay increases for military personnel, with remaining funds directed toward new equipment, including aircraft, armoured vehicles, ammunition, drones and communications systems..Additional funding was also earmarked for improving housing on military bases and maintaining existing ships and aircraft.Former prime minister Justin Trudeau had previously indicated Canada would not meet the NATO target until 2037, drawing criticism from allies.Concerns about Canada’s defence spending have been raised by both U.S. officials and NATO partners.In 2024, a leaked Pentagon document reported by the Washington Post indicated Trudeau told NATO officials Canada would not meet the target without a significant shift in public opinion.That same year, a bipartisan group of 25 U.S. senators urged Canada to present a plan to reach the 2% threshold, describing it as a baseline commitment rather than a ceiling.During the NATO summit marking the alliance’s 75th anniversary, U.S. House Speaker Mike Johnson criticized Canada’s defence contributions, calling them insufficient.Canada’s difficulty meeting NATO spending targets predates recent governments.At the 2014 summit, then-prime minister Stephen Harper did not commit to a timeline for reaching the 2% goal, stating Canada would spend what was necessary for national defence rather than pursuing large-scale expansion.At that time, NATO estimates showed Canada spent approximately 1% of GDP, or $20 billion annually, on defence.Over the following decade, spending more than tripled, though the 2% benchmark has since been reframed within NATO as a minimum expectation rather than a target.In 2025, Canada joined other NATO members in committing to a new benchmark of 5% of GDP on defence by 2035. Carney said reaching that level would require annual military spending of approximately $150 billion.
