Budget 2025: Government contracting and buy Canadian take center stage

Budget 2025 signals that the federal government will use government contracting for defence, national interest and national security infrastructure projects, and general infrastructure projects, as a core tool to counter the economic impacts of global trade disruptions and tariffs. Central to this approach is implementing a robust Buy Canadian Policy, which places a strong emphasis on prioritizing Canadian suppliers, goods, and services in federal contracting, subject to limited exceptions.

Three areas of increased spending 

Defence spending 

Budget 2025 outlines a multi-year plan to strengthen Canada’s defence capabilities and build a domestic defence industrial base. The budget states Canada will meet NATO’s 2% defence spending target this year and will fulfill the NATO Defence Investment Pledge by 2035. Key initiatives include a new Defence Industrial Strategy, a Defence Investment Agency to streamline procurement, and targeted investments in advanced technologies and critical sectors. These measures are designed to create opportunities for Canadian manufacturers and suppliers across industries.

For more information, refer to our article on Canada’s New Defence Policy. 

National interest and national security infrastructure projects  

Through the Building Canada Act and the new Major Projects Office (MPO), the federal government will fast‑track the development of infrastructure projects deemed to be in Canada’s national interest. Budget 2025 identifies these “national interest infrastructure projects” as typical transportation, energy, communications, and public‑safety projects deemed vital because they strengthen Canada’s sovereignty and resilience, provide economic benefits, advance the interests of Indigenous Peoples, and contribute to Canada’s climate goals of clean growth. 

Generally, these projects involve some degree of civil works, including the construction or expansion of ports, airports, rail and road corridors, northern all‑weather routes, and energy infrastructure. In the coming months and years, suppliers will be able to bid on significant national interest projects, alone or as part of a consortium, including the following announced nation-building infrastructure projects:   

• Northwest Critical Conservation Corridor¹
• Critical minerals projects, including Canada Nickel’s Crawford Project, Nouveau Monde Graphite’s Matawinie Mine and Northcliff Resources’ Sisson Mine²
• Iqaluit Nukkiksautiit Hydro Project³
• Arctic Economic and Security Corridor⁴
• Port of Churchill Plus⁵
• Alto High-Speed Rail (Ontario–Quebec Corridor)⁶
• Energy projects, including Pathways Plus and Wind West Atlantic Energy⁷

Budget 2025 also creates new funding vehicles targeted at national security-related trade infrastructure. The following funds will be deployed through competitive procurements led by Transport Canada and partnering sponsors, covering planning, design, engineering, construction, and digital systems: 

• Trade Diversification Corridors Fund: $5 billion over seven years to Transport Canada for port, airport, rail, road, and digital trade infrastructure across priority regions (e.g., Great Lakes–St. Lawrence and West Coast), including projects such as additional container port designations (e.g., Quebec City and Hamilton) to catalyze investment and increase supply chain resilience.
• Arctic Infrastructure Fund: $1 billion over four years for major northern transportation assets with dual civilian military applications (airports, seaports, highways, and all season roads), supported by additional funding to accelerate northern regulatory processes in partnership with Indigenous governments and communities.

Budget 2025 lastly invests in national systems that underpin safety, security, and continuity of operations. For government contractors, this translates into tenders for systems integration, civil works, and technology upgrades projects including the modernization of the Meteorological Service of Canada’s high performance computing platform, renewal of Canada’s National Public Alerting, and targeted airport safety and dual use upgrades through the Airports Capital Assistance Program.

General infrastructure projects 

Beyond national interest and national security-oriented builds, the budget advances broad infrastructure and housing programs designed to mobilize private capital and increase domestic demand for Canadian inputs. Measures include the new Build Communities Strong Fund, capital increases and authorities for the Canada Infrastructure Bank, and the Build Canada Homes agency to scale homebuilding and industrialize modern methods of construction. The government’s new Capital Budgeting Framework reorients fiscal planning toward long lived productive assets and third party capital formation, with annual capital investments rising substantially over the forecast horizon.

Buy Canadian policy

Scope and institutional reach 

Budget 2025 confirms the importance of the Buy Canadian Policy as a lever to stimulate domestic production, reinforce strategic industries, and crowd in private investment. The policy intends to achieve this objective by requiring the government to move from “best efforts” to an obligation for the government to select Canadian suppliers by default, wherever possible. Budget 2025 indicates the Buy Canadian Policy will likely apply across federal departments, agencies, and Crown corporations, leveraging all public spending to strengthen Canadian supply chains. 

To date, the government has not published the specifics of the Buy Canadian Policy, which replaces the Interim Policy on government procurement.⁸ However, on November 26, 2025, the Prime Minister’s Office (PMO) announced the policy will prioritize Canadian materials in all contracts over $25 million. It will also apply to all Government of Canada grants and contributions programs, including federal infrastructure funding programs.⁹

The PMO’s announcement further indicates the Buy Canadian Policy will be focused on supply chains: while it does not require the contracted supplier to be Canadian, it will require Canadian steel, aluminum, and softwood lumber when the value exceeds $250,000.

How will buy Canadian be implemented?   

Budget 2025 also indicates the government will pursue regulatory amendments to ensure buy Canadian aspects of federal procurement are not subject to review by the Canadian International Trade Tribunal (CITT), while continuing to respect Canada’s trade obligations and the proper use of national security exceptions provided for in applicable agreements. 

The government has not yet released these regulatory amendments, but they are expected in the coming weeks. It is unclear how the government’s proposal to limit CITT review of procurements for buy Canadian issues will address the concurrent jurisdiction of Canadian courts to entertain judicial review or actions for damages relating to the fairness of procurement processes.  

Practical implications for Canadian suppliers

Budget 2025’s combination of a strengthened Buy Canadian Policy, large defence and national security infrastructure spending, and streamlined major‑project approvals expands opportunities for Canadian companies not only in relation to core defence spending but also in relation to national interest and national security infrastructure projects.  

To take advantage of the initiatives announced in Budget 2025, suppliers should monitor regulatory amendments and program‑specific procurement guidance that will clarify how the Buy Canadian Policy will be implemented.