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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.

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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.

Changes OPEC+ is making to its oil production quota system will likely spark a wave of upstream investments among members, particularly in low-cost Gulf producers, diminishing concerns of long-term supply shortages.

The Organization of the Petroleum Exporting Countries and other major producing nations, including Russia and Kazakhstan, collectively known as OPEC+, approved on Sunday a new mechanism to assess members’ maximum production capacity, which will be used to set output baselines from 2027.

This may seem a highly technical matter. But it could, in theory, mark a welcome change from recent years’ turmoil that saw some members flagrantly exceed production quotas as OPEC de facto leader Saudi Arabia struggled to impose discipline, confounding the oil market.

Saudi Energy Minister Prince Abdulaziz bin Salman said on Monday the new mechanism will help to stabilise markets and reward those who invest in production. OPEC+ accounts for nearly half of the world’s oil supply of 106 million barrels per day in 2025, according to the International Energy Agency.

First, it is important to understand the new Maximum Sustainable Capacity (MSC) mechanism.

The capacity assessment will be done between January and September using a reputable U.S. auditor for 19 out of the 22 group members. It will involve a review of each country’s oilfields and infrastructure to assess how much oil it can bring on stream within 90 days and maintain for one year.

Among the three countries facing U.S. sanctions, Russia and Venezuela will use a non-U.S. auditor while Iran opted to set its baseline using an average production over the three months to October.

Members’ capacities will be approved in a November meeting, where OPEC+ will also agree on its 2027 output quotas, which will represent an equal percentage of capacity for each member. The MSC will be reviewed on an annual basis going forward.

A WAVE OF GULF INVESTMENTS

The system appears primed to spark a wave of investments among members wanting to increase their own production and revenue.

It nevertheless favours wealthy members that have low development and production costs such as Saudi Arabia, the United Arab Emirates and Kuwait.

Indeed, Gulf producers are already looking beyond near-term oversupply concerns and downplaying questions about future oil demand as the world shifts away from fossil fuels.

The UAE targets growing its production capacity to 5 million bpd by 2027 from 4.85 million bpd today, though there is speculation it could increase its capacity to as much as 6 million bpd. Its investments suggest that may well be the case.

Abu Dhabi’s national oil company ADNOC said on November 24 it plans to invest $150 billion over the next five years to expand operations. It also increased the UAE’s conventional oil reserve base by 6% to 120 billion barrels following new discoveries. ADNOC further seeks to unlock so-called unconventional shale reserves, which it estimates contain 22 billion barrels of oil.

Saudi Arabia, the world’s top oil exporter, has a production capacity of 12 million bpd and by far the group’s largest spare capacity, which reached 2.2 million bpd in October, 60% of total OPEC+ spare capacity, according to the IEA. The country’s national oil company Aramco 2222 extracts oil at $2 per barrel, its CEO Amin Nasser recently said, among the lowest in the world.

Aramco, whose capital expenditure is set to reach $52 billion to $55 billion this year, will bring two new fields on stream by year-end, adding 550,000 bpd of production capacity, it said in its third-quarter results.

Kuwait and Iraq could also now seek to accelerate investment plans.

Kuwait aims to increase capacity to 4 million bpd by 2035 from 2.9 million bpd today, based on IEA figures. Iraq is trying to attract foreign investors, including BP BP. and Exxon Mobil XOM, to boost its production capacity by around 1 million bpd to 6 million bpd by 2028.

SOME OPEC+ MEMBERS TO STRUGGLE

The new system, however, puts members whose production is concentrated in more expensive geological structures or offshore, such as Nigeria and Kazakhstan, at a disadvantage as they will require more time and money in order to grow capacity.

Russia, Venezuela and Iran may also struggle to increase investments and production capacity due to international sanctions that severely restrict supplies of vital drilling equipment and access to Western technologies.
The new investments will nevertheless serve OPEC’s intrinsic goal of growing its market share, in particular after losing ground in recent years as production in the U.S., Brazil, Canada and elsewhere soared.

The spending will also ease growing concerns that the oil industry could face a supply crunch towards the end of the decade and beyond due to lower global spending and the slowdown in production in U.S. shale basins and elsewhere.

THE SYSTEM STILL HAS WEAKNESSES

The new capacity measurement system appears more equitable and transparent, offering members and external market participants a better understanding of OPEC+ policies.

Yet it still has weak spots. For one thing, members will likely still be able to produce and export more than their stated quota, as some, including Kazakhstan and the UAE, appear to have done in recent years.

Furthermore, some members will struggle to grow capacity and production due to sanctions and conflict, creating tensions with other countries that will be able to gain market share.

But overall, OPEC+’s drive will encourage further investments in the oil market that could lead to increased supplies and keep prices relatively low.
Source: Reuters