Canada has selected German defence company TKMS to build a new fleet of 12 submarines in what the government says is the largest military procurement project in the country's history.

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Prime Minister Mark Carney announced the decision on Monday, saying the government would begin negotiations with TKMS on a contract that could take several months to finalise. The government has not disclosed the value of the deal.

Arctic security drives major defence investment

The announcement comes ahead of Carney's trip to a Nato summit in Turkey, where member states are expected to face renewed pressure to increase defence spending. Since taking office, Carney has raised Canada's defence spending to 2% of gross domestic product (GDP) and has pledged to increase it to 5% by 2035.

Replacing an ageing submarine fleet

The new submarines will replace Canada's ageing Victoria-class fleet, which was purchased in 1998. According to the government, only one of the country's four existing submarines is currently seaworthy.

Canada says the conventionally powered vessels will be capable of operating beneath Arctic ice, strengthening the country's ability to protect its maritime territory. With the world's longest coastline, Canada has become increasingly concerned that climate change is making Arctic waters more accessible, creating new security challenges.

"In a more dangerous and divided world, Canada must be prepared to defend our interests, protect our citizens, build our economy, and secure our future," Carney said.

He added that the project would also expand Canada's industrial capacity rather than simply provide new military equipment.

German bid chosen over South Korean rival

TKMS, the world's largest manufacturer of non-nuclear submarines, was selected over South Korean shipbuilder Hanwha Ocean after a competitive bidding process.

Canada launched the procurement programme in July 2024, with Carney promising to select a contractor by June to accelerate the replacement of the existing fleet.

TKMS said its proposal, developed in partnership with Norway, offered Canada a low-risk, Nato-compatible solution while providing opportunities for shared maintenance, repairs, logistics, training and operational cooperation.

Defence spending and strategic partnerships

David Perry, president of the Canadian Global Affairs Institute, said the contract strengthens Carney's claim that his government is moving quickly to increase defence investment.

He said the procurement had advanced at an unusually rapid pace by Canadian standards and reflected the government's commitment to modernising the armed forces.

Perry also said Canada appeared to have prioritised building a long-term strategic partnership with a European ally as Ottawa seeks closer economic and security ties with Europe amid ongoing trade tensions with the United States.

He added that the expanded fleet would significantly improve Canada's naval capabilities, allowing about three submarines to be operational at the same time. That would represent a substantial improvement over recent years, when Canada has often had only one submarine available for service.

The government says the new under-ice submarines will play a vital role in protecting Canada's sovereignty and securing its extensive coastline for decades to come.

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Adapted by ASEAN Now. Source 7 July 2026

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Canada’s sub deal is a reminder of how clean procurement can look when you pick a proven platform. TKMS and Norway offer a “low‑risk, NATO‑compatible” package with shared maintenance, repairs, logistics, training. Basically an off‑the‑shelf ecosystem Canada can plug straight into.

Compare that with Australia’s AUKUS "unclear" submarines, where timelines, designs, industrial plans and even basic delivery logic still feel like they’re floating somewhere between Canberra press releases and Trump mood swings.

Canada gets a conventional fleet that works under Arctic ice and a support network already running across NATO. Australia gets a decades‑long nuclear science project with moving goalposts.

Canada’s approach may seem boring, predictable, and functional, but it's exactly what defence procurement should be. Australia’s is ambitious, geopolitical, and very, very unclear!