Ottawa is booking the estimated cost for the submarines into the federal budget, Carney said — a purchase that will allow Canada to spend the equivalent of four per cent of its GDP on defence by the year 2030.

While the Liberal government has floated the prospect of a large fleet, it does not necessarily have to buy 12 in the end. Carney said there is flexibility in the final number.

Either way, Ottawa aims to have a contract inked by the end of 2027.

Part of the next phase of negotiations with TKMS will be nailing down details of the industrial benefits promised for Canada.

TKMS said its final proposal would deliver $86 billion in economic impact in Canada.

Philippe Lagassé, a professor of international affairs at Carleton University, said it can be difficult to ensure those promised benefits come through, and Canada will want to be clear about that in its contract negotiations.

“A lot of this was about economic investment and working with Canadian companies, you want to make sure that there’s mechanisms that are in place to ensure that those are respected,” he said.

Carney said TKMS will have to invest the same amount in Canada, a price he pegged at “tens of billions of dollars.”

Burkhard said Monday there could be examples of direct investment — naming manufacturing company Marmen, which he said could produce materials for the submarines — and indirect investments, highlighting the Canadian aerospace and defence company CAE.

Stephen Fuhr, the secretary of state for defence procurement, mirrored Carney’s announcement Monday afternoon in Esquimalt, B.C., the navy’s home on the West Coast.

Fuhr declined to give specifics about what ultimately convinced Canada to go with the joint German-Norwegian bid. He said the decision shows Canada’s commitment to speed up procurement, adding that the final choice was close and made only “a few weeks ago.”

Retired vice-admiral Mark Norman said the announcement is exciting and gave credit to the government for getting to this stage so quickly.

“They are demonstrating that when we want to do things differently and we want to be smart and we want to be strategic, we can be,” he said.

Lagassé said there is a level of familiarity with the close NATO allies that likely gave the TKMS bid an edge over Hanwha — and he thinks the Korean side will be “confused and somewhat taken aback” by the news.

Hanwha ran an advertising campaign featuring broadcast icon Peter Mansbridge to promote its subs, while TKMS quietly pressed its case to Canadian officials.

Hanwha had argued it could provide the strongest economic benefits and promised the fastest delivery schedule, thanks to its massive shipyard south of Busan, South Korea.

Paul T. Mitchell, a professor of defence studies at Canadian Forces College in Toronto, said he was surprised to hear TKMS was chosen, because the Korean subs have more to offer in terms of endurance, range and attack capabilities.

“The fact that Canada has worked with Germany and Norway at sea for many decades now means that the institutional relationships between the Royal Canadian Navy and those two navies are much deeper than they are with the Korean navy,” Mitchell said.

Carney emphasized the bids were competitive.

The prime minister said he had a long and cordial conversation with South Korean President Lee Jae-myung over the weekend and the pair planned to speak again at the NATO summit in Ankara.

“There are many other areas where Canada and Korea are co-operating, there are many more where we can deepen that,” he said.

If negotiations with TKMS are not successful, Canada has the right to turn to Hanwha and negotiate with them instead — though Carney said the expectation is that a deal will be signed with TKMS.

This report by The Canadian Press was first published July 6, 2026.

— Written by Kyle Duggan in Halifax and Sarah Ritchie in Ottawa with files from Wolfgang Depner in Esquimalt, B.C.

The Canadian Press