From 2% to 5%: NATO’s New Demands Put Canada in the Hot Seat

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Canada’s long-standing struggle to meet NATO’s defense spending target is about to get even more complicated. Next month, when leaders gather in The Hague, the alliance is expected to raise its defense spending goal from 2% to 5% of national GDP — a bar Canada isn’t even close to clearing.

🔍 The Numbers Don’t Lie

Canada currently spends just 1.3% of GDP on defense — well below the 2% NATO benchmark set years ago. And it’s not just about total spending. Canada also falls short on NATO’s requirement that members spend at least 20% of defense budgets on equipment.

To put it bluntly: Canada is one of only two NATO members failing to meet either of the alliance’s key spending targets.

💣 From 2% to 5% — Why the Sudden Jump?

The push for 5% is coming primarily from U.S. President Donald Trump, who has been pressuring allies for months to significantly boost their defense contributions. NATO’s new Secretary General Mark Rutte confirmed this week that the proposal is gaining support and will be discussed at the June summit.

If adopted, it would mark a massive shift in alliance expectations — and put even more pressure on laggards like Canada.

🧑‍💼 Mark Carney’s First Test on the Global Stage

Newly elected Prime Minister Mark Carney will attend the NATO summit with a lot on his shoulders. His campaign platform promised to rebuild Canada’s defense capabilities and reach the 2% target by 2030 — two years earlier than the Trudeau government’s previous commitment.

But with NATO now eyeing a 5% target, even that pledge may soon feel outdated.

⚖️ The Economic Trade-Off

Beyond politics, there's a practical problem: money.

As NATO raises its demands, Canada is also dealing with a shifting economic landscape. Laval University professor Anessa Kimball warns that ramping up defense spending could become even harder in the middle of a potential trade war — especially if new U.S. tariffs hit Canadian industries.

Kimball suggests Carney might try to leverage Trump’s 5% demand in negotiations around trade, using it as a bargaining chip against tariff pressure.

🏗️ Legacy Issues and Political Cover

Carney may try to distance himself from past failures. As former governor of the Bank of England, he was in the U.K. during Trudeau’s tenure — when Canada’s defense shortfall deepened.

Trudeau had promised to hit 2% by 2032, partly by investing in a vague plan to buy up to 12 new submarines — a promise with no clear timeline. At last year’s NATO summit, Trudeau defended Canada’s low defense spending by calling NATO targets “nominal” and “headline-driven.”

The reaction from allies was harsh — and unpersuaded.

⏳ Time Is Running Out

Perry believes Carney won’t get much sympathy from allies in The Hague — even if he’s new to the job.

Whether Canada can rebuild credibility — and capacity — in time remains to be seen. But if NATO formally moves the goalpost to 5%, Canada will have a mountain to climb.

📌 Bottom Line:
Canada is under growing pressure to do more — and fast. If the 5% defense target becomes official, Ottawa will need more than promises. It’ll need a serious plan, serious money, and serious urgency.