Canada’s National AI Strategy: What it Means for Businesses

Key takeaways

• AI is now central to Canada’s economic strategy. The federal government is prioritizing rapid adoption across sectors, with ambitious targets for business use, job growth, and productivity gains.
• Expect more targeted regulation — not a single overarching AI law. The strategy suggests a shift toward targeted regulation focused on discrete AI risks, supported by broader digital policy reforms.
• Canada is investing heavily in AI sovereignty. New funding for compute, data, and infrastructure aims to reduce reliance on foreign platforms and support domestic AI development.

Initially expected at the end of 2025, Canada’s federal government presented its much-anticipated National Artificial Intelligence Strategy: AI for All (the “National AI Strategy”) on June 4, 2026.

Following the two phases of the previous Pan-Canadian Artificial Intelligence Strategy, respectively launched in 2017 and in 2022 (thus before the rise of generative artificial intelligence (“AI”)), as well as two consecutive budgets which included various measures to support AI development and adoption, including the launch of the Canadian Sovereign AI Compute Strategy (the “Pan-Canadian Strategy”), the National AI Strategy is a further evolution of the federal government’s approach towards AI, representing for the most part a continuation of previous efforts. Its core message? AI is key for Canada’s future growth and adoption of the technology in all sectors must increase, while still requiring targeted guardrails to foster trust and safety.

With this updated policy, the federal government reinforces AI as a national issue touching jobs, privacy, public services, democratic integrity and industrial capacity. Reflective of recent shifts in trade and geopolitical trends, it also puts as one of its core tenets (with adoption and trust) the notion of technological sovereignty.

We summarize the main pillars of the National AI Strategy with a specific focus on its implications for legislative developments related to AI and technological sovereignty.

The pillars of the strategy

The federal government has built its National AI Strategy on six pillars, each supporting one of the strategy’s three main principles: fostering trust, providing opportunities and safeguarding sovereignty. The combination of all seeks to reinforce the flywheel of AI adoption; three of the strategy’s headline objectives are to increase adoption of AI by Canadian businesses from a current 12% to 60% by 2034, create up to 250,000 new AI-related jobs by 2031 and generate a 3% increase in GDP (around $200 billion) from AI-boosted labour productivity and greater commercialization.

The National AI Strategy also identifies five priority sectors for strategic investments:

1. health and life sciences
2. energy and natural resources
3. transportation
4. agriculture
5. manufacturing and robotics

Pillar 1 - Protecting Canadians and Safeguarding our Democracy (Trust Principle)

Focuses on strengthening the legal, regulatory, and institutional safeguards needed to ensure that AI is deployed in ways that protect privacy, public safety, democratic integrity, and public trust (see below for further discussion).

Pillar 2 - Empowering Canadians (Opportunity Principle)

Aims to expand AI literacy, education, and workforce preparedness so that Canadians are equipped to understand, use, and benefit from AI across society and the economy. Key actions related to this pillar include the creation of a National AI Literacy Initiative to provide basic AI training to Canadians, the production of AI literacy content for post-secondary students (hoping to reach 1 million students) and the support of workers at every stage of their careers with AI training and upskilling. Notably, the federal government also promises to promote the standard on accessible and equitable AI by removing accessibility barriers and reflect the principles of the Accessible Canada Act.

Pillar 3 - Powering Shared Prosperity (Opportunity Principle)

Accelerates the responsible adoption of AI across Canadian businesses and public institutions in order to improve productivity, service delivery, and long-term economic growth in a manner that favors the shared distribution of the benefits of AI. Direct support to Canadian SMEs (leveraging of SR&ED tax credit, use of the $500 million LIFT program from the BDC, $500 million investment to enhance the Regional Artificial Intelligence Initiative) and the launch of a new AI Missions Program to focus on high-impact (with a first commitment of $200 million for the healthcare sector) are some of the key actions proposed to bridge the adoption gap.

Pillar 4 - Building the Canadian Sovereign AI Foundation (Sovereignty Principle)

Seeks to grow Canada’s domestic AI capacity through investments in compute, cloud infrastructure, data systems, and talent so that AI can be developed and governed on Canadian terms (see below for further discussion).

Pillar 5 - Scaling Canadian Champions (Sovereignty Principle)

Supports the growth of Canadian AI firms through improved access to capital, commercialization support, and strategic public procurement, enabling them to compete globally while remaining anchored in Canada. This pillar also addresses the “uncomfortable reality” of Canadian AI companies achieving their growth objectives by moving out of Canada. To reverse this trend, actions under this pillar will include the establishment of a $500 million Canadian Tech Growth Fund to provide growth capital and investment support to promising Canadian AI companies (notably through equity stakes) and the expansion of the Compute Access Fund by making available to SMEs $700 million in sovereign compute.

Pillar 6 - Building Trusted Partnerships and Global Alliances (Trust Principle)

Emphasizes Canada’s collaboration with like-minded international partners to shape standards, expand market access, and strengthen Canada’s resilience and influence in the global AI ecosystem. This will be done notably through the expansion of the international partnerships in Europe, the Indo-Pacific and the Middle East.

In focus: New legislative measures (Pillar 1)

One of the most significant features of the second phase of the Pan-Canadian Strategy was the introduction of the Artificial Intelligence and Data Act in June 2022 (the “AIDA”), one of the three legislative components of the Digital Charter Implementation Act which also aimed to update federal privacy laws with the Consumer Privacy Protection Act and the Data Protection Tribunal Act.

Taking inspiration from the European Union’s Artificial Intelligence Act (the “EU AI Act”), AIDA would have created a general and sui generis legal regime for AI in Canada with specific compliance and governance obligations mainly for developers and deployers of “high-impact” AI systems.

This bill, however, had the disadvantage (like the initial version of the EU AI Act) of having been drafted prior to the recent advancements of generative AI. It was also criticized for its vagueness, as it left the details of governance requirements to be determined by future regulations. In the end, those regulations never materialized and AIDA died on the order paper with the prorogation of the federal parliament in early 2025.

As was suggested by various comments made by Minister of Artificial Intelligence and Digital Innovation Evan Solomon throughout 2025, with the National AI Strategy, it does not appear that the federal government intends to reintroduce legislation following the AIDA model.

Rather, the strategy specifically identifies certain risk areas such as the spread of deepfakes, synthetic media and AI-generated disinformation as key areas of concern, as well as consequential decisions about Canadians made by AI systems in contexts such as hiring, lending, healthcare and public services. Interestingly, the notion of “consequential decisions” has been emerging in certain U.S. State laws.

This more targeted, and risk-focused approach is also reflected in parallel legislative initiatives such as the newly released Bill C-34, which aims to address online harm. As an interesting point of context, Liberal party members adopted in April 2026 as part of the 2026 Official Party Policies a resolution encouraging the federal government to introduce a Canadian Artificial Intelligence Governance and Transparency Act which follows the AIDA model.

To address those issues, the federal government now notably promises to:

• modernize consumer privacy legislation “to enshrine a fundamental right to privacy, safeguard children’s information from exploitation and harm, and strengthen people’s control over their personal data”. This aligns with previous comments made by Minister Solomon that suggested the intent to use privacy law modernization to address targeted AI risks.
• “introduce online safety laws to protect Canadians in the digital age, ensuring citizens, children, and customers are safeguarded”. In this regard, as mentioned, the federal government has now tabled Bill C‑34 titled “The Safe Social Media Act”, following the previous attempt with Bill C‑63 which met the same fate as AIDA. The bill enacts a new Digital Safety Act, whose objective is to promote the safety of persons in Canada, by reducing harms arising from harmful online content.
• “continue its review of the Privacy Act to meet the needs of Canadians in the digital age”.

Despite these commitments, the National AI Strategy does not provide much detail on the specific measures and obligations that will be imposed on AI developers and users. What can be expected, after two recent attempts to update Personal Information Protection and Electronic Documents Act (in 2020 with Bill C-11 and again in 2022 with Bill C-27), is a general overhaul of private sector privacy laws along the lines of Quebec’s Law 25. This reform agenda now appears to be complemented by a distinct federal online safety framework under Bill C‑34, which targets the mitigation of specific online harms and the protection of vulnerable groups, particularly children, in digital environments.

In focus: Technological sovereignty (Pillar 4)

A clear focus on the notion of “technological sovereignty” is one notable evolution of the National AI Strategy as compared to the Pan-Canadian Artificial Intelligence Strategy.  The federal government does not hide Canada’s cross-border dependency on underlying infrastructure and data systems, which could constitute detrimental vulnerabilities to its technological sovereignty.

In response, the strategy proposes a “build-partner-buy” model: building domestic capabilities wherever possible, while partnering with trusted allies or using external solutions where necessary. The broader objective is to ensure that Canadian researchers, businesses, and governments can build and adopt AI, using infrastructure and systems that reflect Canadian laws, values, and priorities.

This sovereignty agenda is supported by a much more ambitious infrastructure and industrial program than Canada has seen in earlier AI strategies, but that builds upon measures announced as part of Budget 2024 and Budget 2025, especially regarding the building of sovereign compute capabilities.

Rather than relying primarily on foreign platforms, the federal government intends to build out the physical and institutional foundations that would allow Canadian AI to develop on domestic terms. This includes building world-leading public AI supercomputer for researchers and SMEs, expanding sovereign compute and cloud capacities, scaling large Canadian AI data to at least 100 megawatts (alongside a broader compute build-up of up to 2.3 gigawatts by 2025, notably through encouragement of private investments), stronger fiber and satellite connectivity, improved chip design and fabrication capabilities, and more secure government digital systems spanning sovereign cloud, cyber, and quantum initiatives.

The strategy also includes measures to unlock the power of Canadian national data assets by bringing down silos that prevent the leveraging of data that can be used for AI development, while ensuring security and privacy (this will first be done in the healthcare space with the investment of $100M in the launch of the Health Sector Data Space).

Alongside stronger support for Canadian firms, better access to capital, continued investment in AI research notably through CIFAR and the national AI institutes (Mila, Amii and the Vector Institute, all key parts of Canada’s AI strategy since 2017), and faster routes for highly skilled talent to come and stay in Canada, these measures position technological sovereignty as one of the new strategy’s core goals to ensure Canada is not only a user of foreign AI technology, but also a key contributor.

Conclusion

While the 2017 Pan-Canadian AI Strategy was fundamentally a research-first initiative built around the idea that Canada needed to strengthen its scientific leadership, attract top researchers, and deepen academic expertise in a field in which it had helped lay the intellectual foundations, the second phase, in 2022, broadened the framework by adding measures around commercialization, standards and regulations, and talent development. As we have seen above, the National AI Strategy extends these efforts, especially regarding the promotion of AI adoption and the protection of Canada’s sovereignty.

This evolution suggests that the federal government now believes that Canada’s international standing in AI cannot rest on research prestige alone and that the international competitive context requires the elevation of AI policy to the rank of a full scale infrastructure policy.