2025 Federal Budget: Buy Canadian Policy

Background

On November 4, 2025, the Canadian federal government published its Canada Strong Budget 2025 (Budget 2025), outlining several measures that aim to protect sectors most impacted by United States tariffs and strengthen the Canadian supply chains and economy.

One central measure, initially announced on September 5, 2025, is the Buy Canadian Policy (Policy), which will be implemented by Public Services and Procurement Canada (PSPC). The Policy seeks to buy Canadian goods and use Canadian suppliers wherever possible in federal procurement processes.

Application and Funding of the Policy: From “Best Efforts” to Obligation

Information with respect to the Policy is light on details in Budget 2025; however, there is an indication that the Policy will apply to all federal agencies and Crown corporations and reflects a shift from a “best efforts” approach to an obligation to buy Canadian in federal procurement processes. Where domestic suppliers are not available, the Policy will require that purchases include Canadian content or be sourced from trusted partners, subject to ministerial approval.

To implement the Policy, Budget 2025 proposes to provide C$98.2-million over five years and C$9.8-million ongoing to PSPC, and C$7.7-million over the next three years to the Treasury Board Secretariat, all beginning in 2026–2027.

The federal government will also establish a Small and Medium Business Procurement Program (Program) to support the Policy by facilitating access to federal procurement opportunities for Canadian small- and medium-sized enterprises. Budget 2025 proposes to provide C$79.9-million over five years to Innovation, Science and Economic Development Canada, beginning in 2026–27, to support the Program’s implementation.

The federal government plans to implement regulatory amendments to ensure the application of the Policy does not come under review by the Canadian International Trade Tribunal.

Other Measures Adopting the Policy

Other measures introduced in Budget 2025 have committed to adopting the Policy, including:

• Build Canada Homes: Build Canada Homes, a measure strengthening the construction industry, will adopt the Policy and prioritize projects using Canadian lumber and other Canadian materials such as steel, aluminum and critical minerals.
• Defence Procurement Reform: The federal government is committed to reforming defence procurement to streamline the process of buying Canadian-made equipment.
• Trade Finance: Budget 2025 announces the federal government’s intention for Export Development Canada to launch a C$2-billion concessional trade finance envelope to encourage international partners to buy Canadian.

Key Takeaways

The Policy outlined in Budget 2025 and its related Program will be central to the federal government’s goal of building a more resilient Canadian economy that can better respond to tariff uncertainties. By shifting to an obligatory approach in federal procurement processes and dedicating considerable funding, the federal government is taking steps to ensure a successful implementation of the Policy.

Our team is closely monitoring developments, and we will provide updates when more details are made available, including in relation to any regulatory amendments.

For more information, please contact the authors or any other member of our Infrastructure group.