Canada to announce winner of $60B submarine contract amid tensions with U.S. and push for defense investment

Jul 5, 2026

Prime Minister Mark Carney is set to announce the preferred bidder for Canada's historic $60-billion to $80-billion submarine procurement, choosing between Germany's TKMS and South Korea's Hanwha. The purchase of 12 conventional submarines aims to transform the Royal Canadian Navy's patrol capabilities amid rising geopolitical tensions and a push to meet NATO's defense spending target of 5 percent of GDP by 2035. Both bidders have offered massive economic benefit packages to secure the landmark contract.

Canadian submarine contract decision

▪Prime Minister Mark Carney will announce on July 6, 2026, in Halifax the preferred bidder to build 12 submarines for Canada.
▪The Canadian submarine procurement is estimated to cost $20-billion to $30-billion for the vessels and $40-billion to $50-billion for operations, maintenance, and upgrades.

NATO defense spending targets

▪Canada has committed to increasing its defense spending to 5 percent of its gross domestic product by 2035 to meet North Atlantic Treaty Organization targets.
▪Prime Minister Mark Carney's government is advancing a defense industrial strategy to expand Canada's domestic defense manufacturing capacity.

Germany-South Korea bidding competition

▪No United States defense contractor is bidding for the Canadian submarine contract because Canada ruled out nuclear submarines and the United States does not manufacture conventional diesel-electric submarines.
▪The bidding competition for Canada's submarine contract is between Germany's TKMS, offering the 212CD model, and South Korea's Hanwha, offering the KSS-III Batch-II model.

Industrial benefits commitments

▪South Korea's Hanwha pledged in January 2026 to invest US$200-million in Ontario steelmaker Algoma and purchase US$50-million of steel if Hanwha wins the submarine contract.
▪South Korea's Hanwha has promised over $70-billion in trade and investment in Canada and more than 25,000 annual jobs between 2026 and 2044 if it wins the contract.
▪Germany's TKMS bid, a joint proposal with Norway, is projected to add $86-billion to Canada's gross domestic product and create over 650,000 job years of employment.

Naval capability transformation

▪Canada currently owns four second-hand submarines, of which only one is typically operational.
▪The acquisition of 12 submarines will enable the Royal Canadian Navy to deploy three operational submarines at any given time to patrol Canadian coastlines.

South Korean defense export ambitions

▪If South Korea's Hanwha wins the submarine contract, it will mark the first time Canada has purchased a major weapons platform from a non-Western supplier.
▪South Korea has established an economic objective to build the fourth-largest defense industry in the world.