Sep 29, 2026
Threats to the Canadian Arctic have “shifted significantly” in recent years amid Russia’s full-scale invasion of Ukraine and an upended geopolitical order, according to Foreign Affairs Minister Anita Anand. Despite these pervasive political tensions and a strained relationship between Ottawa and Washington, Anand told The West Block’s Jeff Semple that Canada and the United States remain in close coordination on Arctic security and sovereignty.
For most Canadians, the northern part of our vast country feels far away — however, the bill to keep it protected doesn’t. To hit NATO’s 2% target, Ottawa has spent more than $63 billion, reflecting the largest year-over-year increase to Canada’s defence spending in generations, according to the Prime Minister’s Office. And that’s just the beginning.
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Here’s what the Arctic build-up means for your taxes, your job prospects as well as your portfolio.
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Why is the Arctic suddenly a defence priority?
According to Anand, Russia’s 2022 invasion of Ukraine altered notions of security in Europe and in the Arctic, while the increasing risks of climate change add a layer of urgency. Announcing Canada’s new submarine fleet in July, Prime Minister Mark Carney said this region is “becoming integral to the security of both North America and NATO’s western flank.”
However, the diplomacy is complicated. Canada opened a consulate in Nuuk, Greenland, in February, with plans for one in Anchorage, Alaska sometime in the near future. Yet nearly half of northern respondents (48%) to a poll for the Observatoire de la politique et la sécurité de l’Arctique saw the U.S. as the greatest threat, followed by Russia (30%) and China (12%).
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What will Arctic defence cost Canadians?
The biggest-ticket item sits under the Arctic ice. Canada chose Germany’s TKMS to build up to 12 submarines, with initial deliveries planned for 2034. According to The Globe and Mail, procuring the subs themselves is expected to be worth $20 billion to $30 billion, alongside an additional $40 billion to $50 billion more for operations, maintenance and upgrades. During a press conference in Halifax, Prime Minister Carney announced that the purchase is already included in the government’s fiscal framework, and a decision on new fighter jets is still pending.
Canada has committed to reach 3.5% of GDP on core defence and 1.5% on defence- and security-related investments by 2035. The Parliamentary Budget Officer (PBO) estimates that will result in roughly $33.5 billion a year in extra spending, which will raise the deficit by $63 billion in 2035–36 while also increasing the debt-to-GDP ratio by 6.3 percentage points. The PBO also criticized the federal government for not publishing data to support its own projections.
For the average Canadian, the bill is not small. With $33.5 billion spread across roughly 41 million citizens, the tab works out to about $800 per person per year. No tax increase has been announced, but the money has to come from somewhere, whether that’s via borrowing, cuts to other programs or future revenue changes.
Where are the opportunities for workers and businesses?
It’s not all give and no take for Canadians — the flip side of defence spending is a job pipeline. Ottawa’s $6.6-billion Defence Industrial Strategy aims to award 70% of defence contracts to Canadian firms and create 125,000 jobs by 2035, according to CBC News. Today the Government of Canada reports the sector includes close to 600 firms and 81,200 jobs. The submarine deal also requires every dollar spent overseas to be matched in Canada.
Don’t get too excited, though. Critics say the strategy sets goals without clear policies to achieve them. Job targets are just projections, not guarantees.
Should you buy defence stocks in your TFSA or RRSP?
Defence stocks often jump as soon as a deal is announced, long before any money changes hands. Procurement also moves slowly: The submarine contract isn’t expected to be finalized until the end of 2027, and budgets can shift with future governments.
There’s also a mismatch to be aware of. Many popular defence ETFs hold mostly U.S. contractors, while the government’s “Buy Canadian” push is designed to steer contracts toward domestic firms. Buying into the defence trend doesn’t mean you’re investing in the companies actually getting the money.
What to do now
- Watch the math. Track the next federal budget or fiscal update for how Carney plans to fund the ramp-up.
- Scan the job market. Skilled trades, engineering, shipbuilding and even cyber roles tied to the defence supply chain may expand, especially in coastal and northern regions.
- Small business owners: Check federal procurement listings on CanadaBuys, since the government is prioritizing Canadian suppliers.
- Investors: Keep any defence-focused investments to a small slice of a diversified portfolio, and read an ETF’s top holdings before buying.
Decisions about Arctic security might happen in distant government offices, but everyday Canadians are picking up the tab. The military expansion is already underway. The real question is whether you can leverage it to grow your career, business or investments over the next decade.
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Leslie Kennedy served as an editor at Thomson Reuters and for Star Media Group, followed by a number of years as a writer and editor and content manager in marketing communications, before returning to her editorial roots. She is a graduate of Humber College’s post-graduate journalism program and has been a professional writer and editor ever since.
