German TKMS wins landmark $70bn Canadian submarine contract

Canada has chosen German shipbuilder ThyssenKrupp Marine Systems (TKMS) to supply 12 diesel-electric submarines, beating out South Korea’s Hanwha Ocean. The initial order is valued at over US$12bn, but roughly 50 years of included maintenance will push the total cost beyond US$70bn. The contract still requires final negotiations between Ottawa and TKMS that could take years.

The selection is a major validation for Europe’s non-nuclear defence sector and its leading industrial champions. TKMS, the largest manufacturer of non-nuclear submarines globally, leveraged its status as a key Nato supplier to edge out its rival. German officials repeatedly emphasised this broader compatibility with the alliance ahead of a crucial Nato summit this week, a pitch that outweighed Hanwha’s offers to use Canadian steel and build armoured vehicles locally.

For European investors and the German industrial base, the win could yield dividends far beyond maritime shipbuilding. During the bidding process, TKMS signalled its intention to expand the agreement to include Canadian investments in rare earths, mining, artificial intelligence and battery production for the automotive sector. Securing a foothold in these Canadian supply chains would provide a significant long-term economic boost to German industry.

The submarine deal highlights a broader shift as Canada actively diversifies its defence procurement away from the United States. While Ottawa has committed to buying 18 American-made F-35 fighter jets, recent political tensions have pushed it to look across the Atlantic for other major modernisation projects. Canada is weighing the purchase of 72 Saab-made Gripen warplanes alongside six GlobalEye surveillance aircraft, a separate European package that Saab estimates would create up to 12,600 Canadian jobs.

The 212CD model vessels will replace Canada’s ageing, secondhand Victoria-class fleet, purchased from Britain in 1998, which currently has three of its four boats stuck in maintenance. Unlike Hanwha’s larger deep-ocean vessels, the TKMS submarines are equipped with modern stealth technology optimised for lengthy surveillance missions in contested northern routes like the Northwest Passage. The procurement push aligns with Canadian prime minister Mark Carney’s pledge to raise defence spending to 5% of GDP by 2035, a target Nato secretary general Mark Rutte alluded to on Monday by promising "billions in new contracts" for the "crucial kit we need to deter and defend."