June 2025 will be remembered in Washington for three remarkable promises made by Canada.
First, Prime Minister Mark Carney pledged to raise Canadian defense spending to two percent of GDP this year—five years ahead of his campaign promise and seven years earlier than the target set by former Prime Minister Justin Trudeau during his 2023 visit to Washington.
Second, Carney proposed a new “Security and Economic Agreement” with the United States. He asked for fast-track negotiations to conclude a deal before the scheduled 2026 review of the United States-Mexico-Canada Agreement (USMCA).
Third, Canada agreed to a new NATO goal of spending five percent of GDP on defense—under a redefined formula that allows expenditures on border security and cybersecurity to count toward the total.
The key question now is whether these promises will be remembered for having been fulfilled—or, like past Canadian defense pledges, for being quietly abandoned. The future of the US-Canada relationship may well hinge on the answer.
As former US Ambassador to Canada Bruce Heyman once observed, Americans and Canadians differ in how they approach bilateral commitments. Canadians are negotiators—focused on getting the best possible deal, with delivery dependent on continued consensus and compromise. Americans, by contrast, are litigators: once a deal is struck, they expect it to be honored, with consequences if it is not.
US President Donald Trump is both a seasoned negotiator and a litigious enforcer. Just last month, he sued CBS News for its editing of an interview with former Vice President Kamala Harris—a case that reportedly ended in a $16 million settlement. Should Canada fall short of Carney’s defense promises, the Trump administration is unlikely to let it slide.
From our vantage point in Washington, three flashpoints over the next 12 months could determine whether Canada’s commitments hold—and whether US-Canada relations remain stable.
1. The Security and Economic Agreement
The first test will be the outcome of negotiations now underway for a new bilateral agreement. The Carney government has proposed a 30-day window for reaching a deal. The model could resemble the one just struck between the UK and the United States: Prime Minister Keir Starmer negotiated a package that reduced US tariffs on British goods in exchange for defense procurement commitments favoring American firms.
A similar deal for Canada could ease tariff pressure on Canadian exports. But there’s a risk: if the agreement reduces short-term economic pain, will it also undercut the urgency of long-term defense investment? Hitting the two percent target this year will be politically and fiscally difficult. Raising spending further, or sustaining it in the face of competing budget pressures, will be harder still.
If Canada secures tariff relief but fails to follow through on defense commitments, Washington may conclude that Ottawa bargained in bad faith—and reimpose trade barriers. Such an outcome would cast the agreement as a failure on both sides of the border.
2. The Federal Budget
The second test comes with the Carney government’s budget, which would normally have been tabled in April but was postponed due to Canada’s April 28 election. Meeting the two percent defense target this year will require significant new funding—and a clear, credible plan.
If the proposed Security and Economic Agreement includes specific procurement promises or industrial coordination, the budget will need to reflect these as well. It will be closely watched in Washington for signs that Canada intends to translate rhetoric into results.
3. The NATO Summit in Ankara
The third flashpoint is the July 2026 NATO Summit in Ankara, Turkey. At the Hague Summit this year, new NATO Secretary General Mark Rutte delivered a win for Trump by rallying allies around Article III of the NATO Treaty, which obligates members to “maintain and develop their individual and collective capacity to resist armed attack.”
Trump and his advisors have long argued that Article III commitments are the necessary foundation for Article V—NATO’s mutual defense clause. A strong showing by allies, including Canada, would bolster the case that NATO’s burden-sharing model is working. Weak follow-through, however, could hand Trump’s critics a talking point during the US midterm elections, which will coincide with the summit.
Canada’s record will be judged relative to its peers. If it is among the top performers, it will strengthen its standing in Washington. If it lags—particularly after the bold promises of June 2025—it risks a new round of acrimony.
Tariffs as Punishment—and Politics
If Canada fails at any of these three junctures, new tariffs are likely. Tariffs remain Trump’s go-to tool for signaling displeasure and exacting penalties. Economists may decry them as inefficient or counterproductive, but as the late US Ambassador to Canada Paul Cellucci once put it, for the United States, “security trumps trade.”
That principle cuts across partisan lines. Even if a second Trump administration imposes new tariffs on Canadian goods in response to perceived defense shortfalls, the core concern—burden-sharing within the alliance—would remain the same under any US president.
Yet failure on both fronts—a renewed trade war and Canadian underinvestment in continental defense—would represent a double setback for the United States. Trump might find it politically convenient to “blame Canada,” as the South Park creators once joked, but doing so would not absolve his administration of responsibility for a failed defense strategy.
Getting to Yes: US Engagement Matters
If Washington wants results, it must stay engaged. The Trump administration and Congress should make clear that they are tracking Canada’s follow-through, not just its announcements.
The Carney government governs from a minority position—just one seat short of a majority in the House of Commons. Yet it has already won support from the opposition Conservatives on key legislation: Bill C-2, which strengthens border security, and Bill C-5, which enables critical infrastructure projects such as pipelines. US diplomatic encouragement for Canadian defense spending—public and private—could help Carney secure the votes needed to enact his defense plan.
US military officials at Northern Command and NORAD should report on Canadian progress toward NORAD modernization, ensuring that the Commander-in-Chief has accurate information. With demand for defense production surging across the alliance, supply chain and production bottlenecks may delay delivery of new Canadian systems. If that happens, the Trump administration should recognize Canada’s good-faith efforts—and refrain from punishing it for delays beyond its control.
In short, this is not just a test for Canada. It is a test for Washington, too. Will the United States reward allied investments—or punish them prematurely? Will it support a partner trying to meet its commitments—or treat it as a scapegoat for broader frustrations?
If the Trump administration wants Canada to deliver, it must demonstrate that it values Canadian contributions and is willing to help them succeed.
Madison Lipson is a dedicated professional with a rich background in defence research, program management, and data analysis. As a Research Associate for the Canada Institute at the Wilson Center, Madison brings expertise from roles at the Stockholm International Peace Research Institute (SIPRI) and General Dynamics Land Systems- Canada (GDLS-C), where she excelled in data collection for the yearly publication of SIPRI’s Top 100 Arms Production companies and assisted GDLS-C in managing external relations with the Canadian Department of Defense.
Christopher Sands, Director of the Wilson Center’s Canada Institute, is a specialist on Canada, US-Canadian relations, and North American economic integration. He is the co-host of the Canusa Street podcast and a regular panelist on the Wilson Center’s Americas 360 podcast. His most recent book, co-edited with David M. Thomas, is Canada and the United States: Differences That Count (Fifth edition, University of Toronto Press, 2023). Dr. Sands is a board member of the Canada-United States Law Institute, the Institute for Research on Public Policy, the Macdonald Laurier Institute, and the University of California Berkeley Canadian Studies Program. He was a founding member and officer of the Canadian Politics Section of the American Political Science Association, and he is a member of the editorial board for the Canadian Foreign Policy Journal.
