US Threats Mean Canada Must Strengthen Military, Candidates Say

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(Bloomberg) — Canada must quickly ramp up its defense spending to reach the NATO target while also weaning itself off US-made equipment, argued contenders to replace Justin Trudeau as prime minister.

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But the four candidates — Mark Carney, Chrystia Freeland, Karina Gould and Frank Baylis — sparred over how fast Canada can realistically roll out the billions of dollars in new annual spending it would take to reach the North Atlantic Treaty Organization’s threshold of 2% of gross domestic product.

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“We really need to act with the fierce urgency of now,” said Freeland, citing US President Donald Trump’s threats to make Canada the 51st state. “I don’t think any of us wants to be the leader who was asleep at the wheel and didn’t get Canada defended.”

The government should spend as much of that money as possible within Canada, she added. 

Canada must “protect our Arctic, which is under threat not just now from the Russians and the Chinese, but from potential US incursions,” Carney said.

He agreed Canada must boost its defense spending, but said it should also “leverage all of our assets from critical minerals to clean energy and well beyond to harden those partnerships in Europe and in Asia with like-minded countries.”

The comments came in the second and final debate of the Liberal Party leadership race, which is set to conclude March 9. Carney, the former governor of the Bank of Canada and Bank of England, is widely seen as the front-runner. His chief rival is Freeland, the former finance minister whose stinging resignation in December effectively finished Trudeau’s political career.

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In 2024, Canada was projected to spend about 1.33% of its GDP on defense. Trudeau announced last July that Canada does not plan to reach the 2% target until 2032.

Both Freeland and Gould have promised to accelerate that deadline to 2027, and Gould attacked Carney for his own pledge to get there by 2030. “We don’t have time to wait for this,” she said.

“We will do it faster if we can deploy it faster,” Carney responded. He argued it’s a matter of delivery capacity, “not just pushing money out the door.”

Baylis struck a similar tone, saying he doesn’t see 2027 as realistic. “I don’t think that’s doable in an intelligent way,” he said, noting how difficult it is to do major procurement projects — especially if that procurement is restricted to Canadian firms.

‘Dumb Tariffs’

As with the French-language debate on Monday, the candidates spent much of their time debating how to respond to Trump’s threats to start a trade war against Canada. The two countries have a bilateral trade relationship that involves the exchange of more than $900 billion a year in goods and services.

“If you hit us, we will hit back — but our retaliation will be a lot smarter than their dumb tariffs,” Freeland said about her plan. “We’re going to hit Trump’s best friends. I will impose a 100% tariff on Teslas. I’m going to hit Wisconsin dairy. I’m going to hit Florida orange juice. You are going to see a stock market reaction.”

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Carney raised the prospect of using Canada’s natural resources to inflict pain on the American economy, though did not explicitly threaten export taxes.

“We are their largest supplier of energy, we are their largest supplier of electricity, we are their largest supplier of uranium,” Carney said. “There are the first signs in the United States now of the economic impact of the Trump policies. We will amplify that and that will begin to create the leverage.”

With Tuesday’s debate finished, there will now be a sprint to the finish line less than two weeks away. Trudeau will step down as prime minister after the winner is announced.

Once that happens, the new prime minister will have to decide how quickly to call an election. Canada’s Parliament is set to resume March 24, and all three opposition parties have pledged to force an election call at the first opportunity.

But the new Liberal leader could simply call an election before Parliament returns. Carney, for his part, has suggested in interviews he would seek an early mandate from voters to deal with the tariff threats from Trump.

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