Canada selects Germany's TKMS for record submarine deal ahead of NATO summit

The announcement

Canadian Prime Minister Mark Carney announced on July 6 in Halifax that Germany's Thyssenkrupp Marine Systems (TKMS) had been selected to build up to 12 conventional submarines for the Royal Canadian Navy. The decision came hours before Carney departed for a NATO leaders' summit in Ankara, and it ends a months-long competition against South Korea's Hanwha Ocean.

With this news, we will be sending a strong signal in support of transatlantic and European cooperation at the start of the summit.

German Chancellor Friedrich Merz called the contract one of the largest defense orders in the history of the Federal Republic. Finance Minister Lars Klingbeil described it as a vindication of German engineering and manufacturing.

The deal's strategic logic

Canada's current submarine fleet, four Victoria-class boats acquired second-hand from Britain in 1998, is in poor shape. Only one vessel is operational, and the class is due for retirement by the mid-2030s. The new 212 CD submarines, a common design already ordered by Germany and Norway, will replace them.

This is a signal for this location as a whole, for Made in Germany: that we prevailed in a tough international competition of this scale speaks for our engineering skill, for our manufacturing expertise, for the know-how, and for what can be done at the sites here.

The deal also reflects Ottawa's effort to reduce military dependence on the United States. According to Carney, roughly 70 percent of Canada's defense budget currently goes to US companies. The TKMS contract, by contrast, ties Canada into a European industrial base and a joint venture with Norway.

A trilateral submarine fleet

Germany, Norway, and Canada will operate the same submarine platform, sharing training, logistics, software, sensors, repairs, and spare parts procurement. The German defense ministry has described the arrangement as "Maritime Burden Shifting": the United States remains the nuclear guarantor, while allies take on more conventional capabilities.

For this is truly a strategic initiative that will bind Canada, Germany and Norway together as partners in the North Atlantic region for decades to come.

The submarines will be built at TKMS shipyards in Kiel and Wismar. First delivery could occur as early as 2033, with full operational capability expected by 2035.

Geopolitical implications

The announcement was timed to set the tone for the NATO summit in Ankara. A senior German official said a positive decision would have "a genuine transatlantic dimension." The deal is seen as a signal that the alliance can advance major projects without US participation, at a moment when Washington's commitment is under scrutiny.

At a time when the world is reorganizing itself, having Canada and Norway at our side, and strengthening these alliances even further, is something very important.

Market reaction

TKMS shares rose as much as 11 percent on the day of the announcement, adding to a 30 percent gain in the preceding days. The contract is expected to increase the company's order backlog by more than 50 percent. Canadian media reports put the total value, including decades of maintenance and operation, at around €62 billion. Hanwha Ocean's stock fell roughly 24 percent after losing the bid.