Canada and South Korea are in a period of rapid trade deals as Canada looks to purchase South Korean submarines while bringing their factories and manufacturing to Canada.
In a memorandum of understanding (MOU) signed by the Canadian and South Korean governments, the two nations expressed an “intention to cooperate on advancing a Korean automotive industrial footprint in Canada and advancing electric vehicle (EV) manufacturing opportunities.”
The move has been noted as a further step in reducing Canadian dependence on the United States, especially in the auto-sector, which has seen several rounds of lay-offs as a result of President Trump’s tariff campaign.
The latest of these layoffs occurred at a General Motors manufacturing plant in Oshawa, which saw 1,200 employees laid off as the company continues to scale down operations in Canada.
The MOU comes amidst competition between German and South Korean firms to win a contract to procure up to 12 conventionally powered, arctic-capable submarines for the Royal Canadian Navy, as the nation seeks to replace its fleet of four secondhand submarines.
Both German and South Korean competitors, ThyssenKrupp Marine Systems (TKMS) and Hanwha Ocean, have signed agreements with several Canadian companies in multiple areas in a bid to secure the procurement contract.
TKMS has signed Vancouver’s Seaspan Shipyard, promising to establish a maintenance facility there should they win the contract.
Hanwha signed multiple partnerships with Canadian firms, with Algoma Steel being a notable partner, as steel is amongst the hardest hit industries by President Trump’s tariffs.
In a press release from July 24, 2024, Algoma Steel expressed that it’s been “concerned with the significant impact the current 50 per cent section 232 tariff on Canadian steel is having on its operations and outlook.”
Algoma Steel is the only independent and publicly owned steelmaker, and Canada’s only producer of steel plate.
The signed deal between Hanwha and Algoma Steel is valued at $345 million and is conditional on Hanwha winning the submarine procurement contract. The deal would see Algoma Steel setting up a structural beam mill to support the construction of Canada’s new submarine fleet.
Ottawa reportedly sent tender instructions to the two companies on Nov. 14, 2025 but declined to publish the instructions, with Public Services and Procurement Canada spokesperson Nicole Allen stating that “given the sensitive nature of acquiring a state-of-the-art submarine, the tender instructions will not be made public in the context of national security and sovereignty.”
CBC News was able to access a portion of the tender instructions and reported that the federal government is placing weight on what each competitor can offer in terms of fleet sustainment.
CBC reported that “20 per cent of the decision will be weighted on the platform itself. The company’s financial wherewithal counts for 15 per cent and the remaining 15 per cent involves what sort of economic benefits can be offered in relation to the contract.”
With Canada currently down to just one operational submarine, the country continues to search for a suitable partner to procure its next generation of submarines.