Canada to decide on submarine contract ahead of NATO summit in Turkey, according to reports

The timing of the announced decision is remarkable: it is to come before Carney's departure for the NATO summit, which begins on Tuesday in the Turkish capital Ankara. The announcement would thus be placed directly in the context of the alliance, which has recently come under massive pressure from the USA to significantly increase its members' defense spending.

Background: Pressure from Washington and NATO quotas

According to its own statements, Canada has achieved the NATO target of spending two percent of gross domestic product on defense earlier than originally planned. At the same time, the country is under pressure from the USA to further increase its military spending. A new submarine deal would significantly modernize the Canadian Navy and at the same time strengthen the industrial base in the country.

According to the words of a spokesperson, the German federal government had repeatedly advocated on behalf of the German company in the ongoing bidding process. Members of the federal government had repeatedly advocated on behalf of the German company. In the run-up to the NATO summit, the federal government also formulated high expectations for a possible contract award.

Berlin sees a decades-long project

The day before the NATO summit, a source from the German government expressed the hope for a long-term binding of Canada to the German arms industry. "If it succeeds, it will bind Canada to us for decades," the source is quoted as saying by the Deutsche Presse-Agentur (dpa). A successful award would therefore be "a very good signal ... in the context" of the summit and "a very good starting point for strategic cooperation."

Following the "Globe and Mail" report over the weekend, TKMS shares rose significantly. The stock gained 11.2 percent on Monday to 93.40 euros, reaching its highest level since mid-March. At that time, TKMS led the MDax, the index of mid-sized German stock market values.

Shares rise, Bernstein remains neutral

Bernstein Research had already issued a valuation of the TKMS stock with a "Market-Perform" rating on May 14, 2026. This assessment is equivalent to a fundamental neutral assessment of the medium-term price. The investment bank thus rates the stock neutrally.

According to the federal government's assessment, the investment volume of a possible order would be considerable. It concerns the construction of a fleet of conventionally armed submarines for the Canadian Navy, which is to operate in the North Atlantic and the Pacific. Industry circles speak of a magnitude that could be in the single-digit billions range.

In addition to TKMS and Hanwha Ocean, other shipyards had also bid for the Canadian contract. The South Korean shipyard Hanwha Ocean had recently attracted attention through strong growth and is considered a technologically proficient competitor. With a possible award to the German shipyard, Europe would receive the largest export order for conventional submarines in years.

Regional and economic significance

The federal government hopes that success in the Canadian bidding process will significantly deepen arms cooperation with Ottawa, which is to extend beyond the submarine deal. The two countries already cooperate within NATO, on the supply of military vehicles, and in arms research. A formal strategic partnership could trigger further billion-dollar projects.

Observers in Berlin interpret the timing of the reporting as a signal to the USA and to other NATO partners that Europe wants to become more militarily independent. A submarine deal with Canada would show that European arms companies are capable of delivering complex weapons systems to the North American market and maintaining them there over long periods.

Should Ottawa award the contract to TKMS, both sides would have to negotiate a formal contract in the coming months. The TKMS chief had recently stated that the shipyard was ready to implement the project even with larger production volumes. Kiel would then become the center of a transnational arms program, with construction contracts spanning more than a decade.

Comparison with Australia and market outlook

The previous procurement process in Australia, the so-called "Future Submarine" contract, was ultimately awarded after years of delays and cost increases to the US manufacturer Naval Group, now a consortium. Against this backdrop, Berlin government circles see the Canadian process as a litmus test for the competitiveness of European shipyards.

On the day of the planned decision, attention also turned to financial markets. Analysts viewed the possible contract as an indicator of the recovery of the European arms industry after a phase of consolidation. Private investors who have invested in TKMS are likely to follow further developments particularly closely.

Confirmation of the decision from Ottawa was not available at the time of reporting. Government spokespersons in Berlin initially did not want to comment on the "Globe and Mail" report. However, observers in both capitals expected the decision to be officially announced in the coming hours.

Outlook: Negotiations and geopolitical signals

The geopolitical significance of the contract extends beyond the bilateral relations between Berlin and Ottawa. A successful deal would strengthen arms cooperation between like-minded democracies within NATO and at the same time send a signal to competitors such as Russia. According to its own statements, TKMS is one of the few shipyards worldwide permitted to export conventional submarines on this scale.