Canada selects German firm ThyssenKrupp Marine Systems to build 12 submarines in largest defence deal in nation's history

Jul 6, 2026

Prime Minister Mark Carney has announced that Canada selected German shipbuilder ThyssenKrupp Marine Systems (TKMS) to build 12 new conventionally powered submarines. The deal, estimated at up to $24 billion with lifetime costs potentially exceeding $70 billion, is the largest defence procurement in Canadian history. The new under-ice capable vessels will replace an aging fleet of four secondhand Victoria-class submarines, of which only one is currently seaworthy. The decision strengthens Canada's ties with European NATO allies but has drawn criticism for potentially undermining strategic relations with South Korea and the wider Indo-Pacific region.

TKMS submarine contract selection

▪Canada retains the right to designate South Korea's Hanwha Ocean as the preferred supplier if negotiations with ThyssenKrupp Marine Systems are unsuccessful.
▪The federal government of Canada will enter into negotiations with ThyssenKrupp Marine Systems to sign a contract, a process expected to take several months.
▪The purchase of the 12 submarines is estimated to cost up to $24 billion, with total program costs including lifetime maintenance potentially exceeding $70 billion to $100 billion.
▪Prime Minister Mark Carney announced that Canada has selected German shipbuilder ThyssenKrupp Marine Systems as the preferred choice to build a new fleet of 12 submarines.

Canadian defence procurement reform

▪Canada's Liberal government has committed to increasing defence spending to 5% of gross domestic product by 2035, after reaching the 2% benchmark in 2026.
▪The submarine procurement is described by Prime Minister Mark Carney as the largest single defence procurement in Canadian history.

Industrial investment commitments

▪Prime Minister Mark Carney stated that Canada is set to receive tens of billions of dollars in economic investments across every region of the country as part of the submarine deal.
▪ThyssenKrupp Marine Systems originally committed to delivering four submarines to Canada by 2036, but a senior federal official stated that timeline could be advanced to 2034.

NATO alliance positioning

▪The submarine announcement was timed ahead of Prime Minister Mark Carney's departure to the NATO summit in Ankara, Turkey.
▪The selection of the German-Norwegian bid aligns Canada closer with European NATO allies at a time of trade tensions and strategic divergence with the United States.

Indo-Pacific strategic concerns

▪Former diplomat Marius Grinius criticized the decision, stating that choosing the German bid squandered a strategic opportunity for Canada in the Indo-Pacific region.
▪Prime Minister Mark Carney rejected claims that Canada is stepping away from the Indo-Pacific, stating that Canada remains committed to its Indo-Pacific strategy.

Royal Canadian Navy fleet transformation

▪The 12 new conventionally powered, under-ice capable submarines will replace Canada's aging fleet of four secondhand Victoria-class submarines bought from Britain in 1998.
▪Only one of Canada's current four Victoria-class submarines is currently seaworthy, with the other three undergoing maintenance.