Canada is in advanced talks with the European Union to join the bloc’s new project to expand its military industry, a move that would allow Canada to be part of building European fighter jets and other military equipment at its own industrial facilities.
The budding defense cooperation between Canada and the European Union, which is racing to shore up its industry to lower reliance on the United States, would boost Canada’s military manufacturers and offer the country a new market at a time when its relationship with the United States has become frayed.
Shaken by a crisis in the two nations’ longstanding alliance since President Trump’s election, Canada has started moving closer to Europe. The military industry collaboration with the European Union highlights how traditional U.S. allies are deepening their ties without U.S. participation to insulate themselves from Mr. Trump’s unpredictable moves.
Canada’s new leader, Prime Minister Mark Carney, this week made Paris and London the destinations of his first overseas trip since taking office on Friday, calling Canada “the most European of non-European countries.”
Two officials, one from the European Union and one from Canada, with direct knowledge of the discussions said detailed talks were underway to incorporate Canada into the European Union’s new defense initiative. The goal is to boost the E.U.’s defense industry and eventually offer a credible alternative to the United States, which is now dominant.
Specifically, the officials said, Canada would be able to become part of the European military manufacturing roster, marketing its industrial facilities to build European systems like the Saab Gripen jet, a competitor to the American F-35, which is made by Lockheed Martin.
The officials requested anonymity to describe the talks because they were not authorized to brief the press and the negotiations were still ongoing. They said that no specific contracts had been discussed yet.
The European Union is taking major steps to increase military spending, both loosening budget rules so that countries in the bloc can spend more and proposing a 150 billion euro loan program ($163 billion) to finance shared military development.
That program is meant to prioritize European-made products, with 65 percent of component costs coming either from within the bloc or from partners that have signed a specific type of deal with it. Under the current talks, Canada would help supply the additional 35 percent and could go further if it brokered an additional agreement to participate even more closely.
Canada, according to the terms of the discussion, would also be given preferential access to the E.U. market for military equipment, an alternative to buying equipment from the United States.
In a similar way to the European Union, which is having to step up its aid to Ukraine rapidly as the United States limits its own, Canada is going through a rude awakening in terms of its lagging military capabilities and investments. It is among the NATO allies that has been criticized as under-spending on its military.
The NATO goal is for members to invest at least 2 percent of economic output in defense. Canada spends only about 1.3 percent but has unveiled plans to ramp up to 2 percent by the end of the decade.
Mr. Trump has been insisting that Canada should simply become part of the United States, citing the dependence on the American military as one argument.
On Tuesday, Mr. Carney announced that Canada had struck a radar technology deal with Australia.
Canada’s military industry, which is relatively small, has been used to produce Canadian equipment but has also been a regular contractor for building American military equipment or parts. Canadian factories across the vast country produce munitions, tanks, aircraft, technological defense systems and navy ships.
An in-depth industry review in 2022 found that about half of Canada’s military equipment was exported and half kept domestically. The top export destination, by far, was the United States.
Since Mr. Trump’s election, Canada has been increasingly aligning itself more closely with partners across the Atlantic, seeking to diversify trading partners and defense allies away from its core relationship with the United States.
In a document prepared by the European Union to lay out the plans for its defense initiative, Canada was explicitly mentioned, hinting to the talks to absorb the country into the E.U. military industry project.
Mr. Carney spoke with Ursula von der Leyen, president of the European Commission, on Sunday, and military industrial cooperation was discussed on that call, the two officials said.
“Our cooperation with Canada has intensified and should be further enhanced, also to strengthen trans-Atlantic security,” said the E.U. document, released on Wednesday. It added that talks were underway “including on respective initiatives to boost defense industry production.”
To be sure, the European initiative and the Canadian partnership would take years to bear fruit. E.U. defense has been falling behind because of American dominance and underinvestment, and the drive to arm Ukraine depleted the arsenals of E.U. members. Ramping up production takes time, and firmed-up contracts for specific military equipment, to allow defense companies to invest in the production of extremely expensive items, like aircraft.
Jeanna Smialek contributed reporting from Brussels.