Canadian Prime Minister Mark Carney has set an ambitious goal: he wants Canada to join the European Union’s sweeping new defense investment program, “ReArm Europe,” by July 1, 2026. Speaking on CBC’s Power & Politics, Carney explained that his government is moving quickly to become part of the EU-led initiative, which aims to pour $1.25 trillion into defense over the next five years. The move marks a significant shift in Canada’s defense strategy, with Carney openly stating, “Seventy-five cents of every dollar spent on defense goes to the United States. That’s not a smart move.”
Carney’s remarks highlight a growing concern in both Canada and Europe: overreliance on foreign suppliers—especially the U.S.—for military equipment and technology. Since taking office in the spring of 2025, Carney has been engaged in negotiations with the EU to secure Canada’s participation in the program. He expressed optimism about the talks, noting, “significant progress” and a desire to have “something concrete to show by Canada Day.”
But Carney isn’t just focused on Europe. He has also fielded overtures from the United States, most notably from former President Donald Trump. Trump, never one to shy away from grand gestures, suggested that Canada could join the U.S. defense system for free—if it agreed to become the 51st state. Otherwise, he said, it would cost Canada $61 billion. “They are considering the offer!” Trump claimed. Carney, however, reportedly made it clear during a meeting in Washington that Canada is not interested in statehood, preferring instead to chart its own course.
This push for greater autonomy comes at a time when NATO itself is on the verge of setting a new, more demanding defense spending target. At a gathering in Ohio in early October 2025, NATO Secretary-General Mark Rutte announced that alliance members are close to agreeing on a new goal: 5% of each country’s GDP, with 3.5% earmarked for direct defense and 1.5% for related areas like cybersecurity and logistics. Trump, who has long pressured allies to increase spending, has been calling for this 5% target for months.
Carney acknowledges that Canada will need to boost its defense budget, but he’s determined to do so “in a smart way.” Rather than committing to a specific number, he insists that the country must first ask, “What is needed to ensure the security of our country? And how can we make sure every dollar brings the greatest benefit to Canada?” He confirmed there will be no federal budget this spring, opting instead for a more detailed autumn budget after the government has had time to refine its defense priorities. “We will have to spend more, faster,” Carney said.
Meanwhile, across the Atlantic, Europe faces its own set of challenges as it tries to rearm and build a more resilient defense sector. China’s recently announced export restrictions, set to take effect on December 1, 2025, have sent shockwaves through the European defense industry. The Aerospace, Security and Defence Industries Association of Europe (ASD)—which represents over 4,000 companies, including giants like Airbus, BAE Systems, Saab, Thales, and Rheinmetall—has warned that the new Chinese measures could severely disrupt Europe’s supply chains.
“We are closely monitoring the new measures and will assess their practical implications as further details emerge,” ASD spokesperson Adrian Schmitz told Euronews. The restrictions will hit companies linked in any way to foreign militaries, with Beijing automatically denying any applications to use rare earths for military purposes. The aim, according to Chinese officials, is to prevent rare earths and related technologies from ending up in foreign defense industries.
Experts like Daniel Fiott, a professor at the Brussels Centre for Security, Diplomacy and Strategy, warn that the timing couldn’t be worse. “Expanded Chinese restrictions would hit Europe’s defense industry hard, potentially delaying ammunition production and high-tech systems that rely on critical minerals,” Fiott told Euronews. He added, “It comes at the worst possible time too, just as Europe seeks to rearm and scale up its defense base through greater investment.”
At a NATO meeting in The Hague this summer, the 32 alliance members—22 of which are also EU countries—pledged to increase defense spending to 5% of GDP by 2035. The EU, for its part, is working to coordinate joint procurement, reduce dependence on foreign suppliers, and advance flagship projects like the “drone wall” and the Eastern Flank initiative. These projects are designed to deter potential Russian aggression and strengthen Europe’s overall security posture.
Still, China’s tightening of export rules on rare earths adds a daunting new layer of complexity. As Joris Teer, a research analyst at the EU Institute for Security Studies, put it, “China is in the process of pulling the rug out from under Europe’s rearmament efforts, just as the Kremlin steps up its aggression beyond Ukraine.” Teer warned that the new controls could slow military innovation not just in Europe, but across NATO and its Asian partners, affecting everything from radar systems to quantum computing.
The numbers are stark: China supplies 31% of the EU’s tungsten and a staggering 97% of its magnesium metal, both critical for modern defense systems. Demand for rare earths in Europe is projected to rise sixfold by 2030. To address this vulnerability, Brussels passed the Critical Raw Materials Act in early 2025. The act sets ambitious targets: by 2030, the EU aims to meet 10% of its demand through domestic extraction, 40% through processing, and 25% through recycling, while limiting reliance on any single country to no more than 65% per material.
But as experts are quick to point out, reducing dependency is easier said than done. “Europe must also come up with bold ideas for investing in domestic refining and recycling to reduce dependency on China,” Fiott noted. “This may come at some environmental cost, so it will not be easy to balance defense and climate targets.”
Some European defense firms, like Rheinmetall, have expressed confidence in their ability to weather the storm. “We secure our requirements through strategic purchasing and warehousing, (and) we have a wide variety of highly differentiated supply sources from all parts of the world,” a company spokesperson told Euronews. Smaller firms, however, worry about disruptions to production schedules and rising costs, though many are already taking steps to qualify multiple suppliers and redesign products to reduce reliance on rare materials.
The diplomatic fallout from China’s export controls is already being felt. European Commissioner for Trade Maroš Šefčovič called the measures “unjustified,” arguing that they further harm European companies already facing delays in Chinese export licensing. “Rare earths and permanent magnets are key elements in practically everything with a digital component. To have this dramatic expansion of scope and add additional products is aggravating the situation,” Šefčovič said. He has requested a videoconference with his Chinese counterpart to discuss the issue, scheduled for mid-October 2025.
All of this is unfolding against a backdrop of rising trade tensions between Beijing and Washington. Presidents Donald Trump and Xi Jinping are expected to meet in late October at the APEC summit in South Korea, just before China’s new export measures take effect. Some analysts see the timing as a negotiation tactic, while others fear it could worsen an already fraught relationship. The Chinese Ministry of Commerce, for its part, has said it is willing to “ensure the security and stability of global industrial and supply chains,” but European business leaders remain wary.
As Canada weighs its next moves and Europe scrambles to shore up its defenses, one thing is clear: the global security landscape is shifting fast, and the old certainties about alliances, supply chains, and military readiness are being tested like never before.
