Ottawa’s “Buy Canadian” policy will be featured in the fall federal budget and is expected to be fully in place by next spring, according to a senior federal source.
The source said initial elements of the policy should be in effect by as early as November, and will be fully applied in 2026.
The source, who CBC News has agreed not to name because they were not authorized to share their knowledge of the government’s plans, added that details in the November budget would be key for moving the policy forward. They said they expect new funding to be attached.
“We are starting from scratch,” the source said, and the government is navigating how to implement an assertive policy, “while complying with our free trade agreements.”
Whether the government can implement the policy without separate legislation or new spending has not been settled, the source said.
Finance Minister François-Philippe Champagne, Industry Minister Mélanie Joly and Procurement Minister Joël Lightbound are involved, the source said, and Lightbound is charged with implementing the policy.
Prime Minister Mark Carney has announced new measures to make the Canadian economy more resilient to global shocks like US tariffs.
The Prime Minister’s Office declined to confirm the information shared with the CBC News, but a spokesperson did say further details will emerge in the budget scheduled to be tabled Nov. 4.
“As the prime minister announced earlier this month, new measures will be introduced by November 2025 to make sure that Canadian suppliers and their products are prioritized in all federal spending,” said Audrey Champoux, the lead press secretary for Prime Minister Mark Carney.
“Canada’s new government will ensure that the public sector can serve as an anchor customer for Canadian businesses, and move from an approach of ‘best effort’ to a clear obligation to support Canadian industries.”
The Government of Canada is the country’s largest buyer of goods and services, purchasing about $37 billion worth each year. Public Services and Procurement Canada and Shared Services Canada account for 75 per cent of those purchases.
Earlier this month, Carney announced a range supports for sectors heavily impacted by tariffs from China and the United States on canola, softwood lumber, steel, aluminum and vehicles.
It included a “reskilling” package to train 50,000 workers, a $5-billion fund to help trade-dependent businesses “pivot,” immediate liquidity relief and what he called a new Buy Canadian policy.
According to a backgrounder from the federal government, the policy will make it clear that supporting Canadian industries is an obligation.
It adds that the policy will require “domestic and foreign suppliers contracting with the federal government to source key materials from Canadian companies in defence and construction procurements exceeding a certain threshold.”
The government intends to extend this obligation to infrastructure spending, grants, contributions and loans, and apply it to federal agencies and Crown corporations not previously subject to federal procurement requirements.
Canada’s steel industry has been calling for a formal “buy Canadian steel” policy as it says thousands of jobs are at risk due to American tariffs.
Only a third of all steel that Canadians buy comes from domestic sources. The rest, according to the Canadian Steel Producers Association, comes from American and other foreign sources.
The association’s CEO, Catherine Cobden, says Canadian producers have the capacity to replace more than 80 per cent of that imported steel, but producers have been undercut by “unfair traders.”
Cobden wants the government “to take measures at the border to protect the domestic industry.”
A Buy Canadian provision, Cobden said, won’t “completely offset” the impact of U.S. President Donald Trump’s tariffs, but it would help.
According to a report from BMO Economics in April, a shift toward buying Canadian among both consumers and the government could add roughly $10 billion to the economy annually. But the report warns this comes with higher costs.
Who can pivot?
Beyond the expense, not every sector can pivot to buy Canadian so easily. The domestic renewables sector relies on foreign components to build out battery storage and solar and wind power generation as demand grows.
“A clear requirement might add some serious complications and delays to the projects that power Canada’s economy,” said Fernando Melo, the senior director of federal policy and public affairs for the Canadian Renewable Energy Association, at a moment when the Canadian industry faces fierce global competition.
Melo said that depending on how the policy is crafted, it could harm his members and a potential 31,000 megawatts of renewable energy.
From wind turbine blades to solar panel racking, Canadian companies depend on components from Colorado, Germany and Vietnam.
His association proposes incentives, rather than penalties, to companies that buy Canadian.
Risk of free trade violations
There are questions about whether such a policy would violate trade agreements.
Mark Warner, a Canadian and American international trade lawyer with Maaw Law, said some of Ottawa’s trade agreements as opposed to CUSMA have “long and technical” rules that often prevent Canada from blocking other foreign companies from bidding on procurement contracts above certain thresholds.
But Warner added it will be hard for Canada to have a Buy Canadian policy without looking like a hypocrite. The country, he said, has complained about other countries doing the same.
“Once you go down this road, it’s very hard to stand up and complain about someone else,” Warner said.
Warner also wonders what will happen if Canada and other countries chip away at the free trade system.
“How long can that multilateral or plurilateral system survive if countries like Canada, that were such a part of building it, pull away from it?” he said.
