Canada Embraces “Buy Canadian” Procurement Policies

After a long history of criticizing “Buy American” policies, Canada is now implementing its own suite of “Buy Canadian” policies, in response to President Trump’s tariff and trade policies, as well as “Buy American” restrictions. This post outlines Canada’s new procurement restrictions and their potential implications for US suppliers. (An earlier post, Ontario Retaliates Against Tariffs with US Procurement Ban, examined the province of Ontario’s implementation of a procurement ban against US suppliers in retaliation for Trump Tariffs.)

Canada began in July 2025 to replace its open-by-default government procurement system with implementation of a reciprocal procurement policy. That policy excludes from non-defense federal procurement suppliers whose home countries do not provide equivalent access to Canadian suppliers in their procurement markets, as described in an earlier post, Canada Restricts Procurement Access with New Reciprocity Policy.

In September 2025, Canadian Prime Minister Carney announced new measures to protect, build, and transform the country’s strategic industries. They included a Buy Canadian Policy to ensure that the federal government buys from Canadian suppliers, requires local content in its procurement, and only purchases from trusted partners when Canadian suppliers are “truly unavailable.” The new mandate applies to federal agencies and crown corporations and will be expanded to infrastructure spending, grants, contributions, loans, and other federal funding streams. It is also intended to serve as a roadmap for provinces, territories, and municipalities.

In accordance with the prime minister’s announcement, the Canadian federal government implemented two new policies on December 16, 2025 under a Buy Canadian Procurement Policy Framework. One policy gives priority to Canadian materials in federal procurement and the other prioritizes Canadian suppliers and content in strategic procurement.

The Policy on Prioritizing Canadian Materials in Federal Procurement mandates the use of certain Canadian-produced materials in federal construction and defense procurements valued at $25 million or more. When such procurements require at least $250,000 worth of steel, wood products, or aluminumaluminum—the “three pillars of Canada’s industrial base,” they must use materials that are manufactured or processed in Canada. The policy could be extended to other key products.

The Policy on Prioritizing Canadian Suppliers and Canadian Content in Strategic Federal Procurement gives priority to Canadian businesses and Canadian-made content in federal procurements with an estimated value of over $25 million (decreases to $5 million on June 15, 2026) in five strategic economic sectors: (i) defense and security; (ii) health and pharmaceuticals; (iii) infrastructure, construction, and transportation; (iv) information and communications technology; and (v) consumer and industrial goods and materials. When this policy applies, procurement is open to Canadian suppliers and suppliers from trading partners with an international trade agreement that applies to the procurement. However, Canadian suppliers will receive a 10% reduction to the total value of their bids in the bid evaluation process. In addition, to provide incentives for the use of Canadian content, all bids will be assessed based on their inclusion of Canadian goods, services, and value-added content, with additional points awarded for higher proportions of Canadian content.

Applicable international trade agreements include the WTO Government Procurement Agreement (GPA), the Comprehensive and Progressive Trans-Pacific Partnership, and other free trade agreements. (The US-Mexico-Canada Agreement (USMCA) is not included since Canada does not cover procurement under that agreement.)

A federal procurement may be exempt from the two policies (with approval of the relevant minister) under the following conditions: (i) use of Canadian materials will increase the overall cost by 25% or more; (ii) application of the policy is inconsistent with the public interest; (iii) materials are not available in Canada; (iv) application of the policy will delay procurement of critical defense or national security equipment; and (v) Commercial or Military Off-The-Shelf products.

The policy defines several terms related to Canadian suppliers and Canadian content.

— To be considered a Canadian supplier, a supplier must: (i) have a place of business in Canada where it conducts activities on a permanent basis (each member of a joint venture must have a place of business in Canada); (ii) be registered and file taxes in Canada; (iii) maintain a registered address in Canada and employ personnel and/or conducts day-to-day business activities in Canada; and (iv) not subcontract work to non-Canadian suppliers, in a manner that would minimize Canadian activity.

— A Canadian good is a good wholly manufactured or originating in Canada or a product containing imported components that has undergone sufficient change in Canada in a manner that satisfies the definition specified under the USMCA Rules of Origin.

— A Canadian service is a service, including construction services, wholly provided by natural persons based in Canada.

Another Buy Canadian policy that has been announced but not yet been implemented is a Small Business Procurement Program, which will reserve federal procurement opportunities for Canadian small businesses, with mandatory set-asides applied where feasible. The details of this program have not been released.

In an analysis of Buy Canadian policies, a Canadian law firm described recent amendments to the Canadian International Trade Tribunal Procurement Inquiry Regulations, which removed the jurisdiction of the Canadian International Trade Tribunal (the CITT) to review and address challenges to federal procurement challenges involving the Buy Canadian Procurement Policy Framework. It pointed out that as a result, “foreign suppliers will be unable to file a complaint to the CITT on the grounds that the ‘Buy Canadian’ requirements violate non-discrimination provisions in the procurement chapters of Canada’s international trade agreements.”

An outstanding question is whether the new Canadian policies are consistent with Canada’s commitments to provide national treatment to the United States and other parties under the GPA. A primary issue will be whether a procurement that gives preference to Canadian goods, services, or suppliers is covered under the GPA. Canada has broad coverage of its central government entities under the GPA. However, it has also excluded certain procurement from its commitments. For example, it exempts “urban rail and urban transportation equipment, systems, components and materials incorporated therein as well as all project related materials of iron or steel” from its coverage. In addition, it has taken a broad reservation for “set asides for small and minority owned businesses.” The US and other parties could be expected to raise their concerns with Canada’s new policies in the WTO procurement committee, which oversees the GPA.

Jean Heilman Grier

February 18, 2026

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