24 April 2025 Julie Soloway  -  Fraser Malcolm  -  Isaac Bushewsky ForeignInvestmentLinks

In the Eye of the Tariff Hurricane: Canada Releases New Guidelines on National Security Reviews

Last month – the day after President Trump imposed a second round of tariffs on Canada (most of which would be suspended the next day) – the Canadian Minister of Innovation, Science and Industry, Francois-Phillipe Champagne*, announced revisions to the guidelines for the country’s FI screening legislation, the Investment Canada Act (ICA). This announcement was part of Canada’s response to its growing trade rift with the United States. Since the start of trade tensions between the two countries, former Prime Minister Justin Trudeau has been replaced by former governor of both the Bank of Canada and Bank of England, Mark Carney, with a federal election looming next week (i.e. April 28, 2025).  

Reflecting the heightened economic uncertainty caused by the trade tensions, Minister Champagne was blunt in how he considered foreign investments into Canada: “[A]s a result of a rapidly shifting trade environment, some Canadian businesses could see their valuations decline, making them susceptible to opportunistic or predatory investment behavior by non-Canadians.” He noted that in reviewing investments “the size of the Canadian business, its place in the innovation ecosystem, and the impact on Canadian supply chains, will all be considered.”

The Canadian government’s formal communications were more subdued. In conjunction with the announcement, it released updated Guidelines on the National Security Review of Investments (Guidelines) which introduce a new “economic security” factor in assessing whether a proposed investment is injurious to Canada’s national security. This new factor means that foreign investment screening will further consider “[t]he potential of the investment to undermine Canada's economic security through the enhanced integration of the Canadian business with the economy, or any sector of it, of a foreign state”.

The revised Guidelines have also incorporated the government’s Sensitive Technology List, a set of 11 technology areas considered sensitive for a national security review, set out below. 

  • Advanced Digital Infrastructure Technology
  • Artificial Intelligence and Big Data Technology
  • Advanced Energy Technology
  • Human-Machine Integration
  • Advanced Materials and Manufacturing
  • Life Science Technology
  • Advanced Sensing and Surveillance
  • Quantum Science and Technology
  • Advanced Weapons
  • Robotics and Autonomous Systems
  • Aerospace, Space and Satellite Technology

Takeaways for Businesses

  • It is now transparent that economic security is a factor for national security reviews under the ICA. While typically economic considerations have been relevant under the “net benefit” review process, applicable to the largest transactions, the Canadian government can now initiate a national security review for nearly any investment in Canada, including post-closing upon receipt of a notification filing, which is required for every acquisition of a Canadian business.
  • Importantly, the tone of the announcement signifies an increased emphasis on national security concerns in reviewing foreign investments and that the ICA will be used as Canada looks to augment its toolkit to maintain economic security and sovereignty. 
  • Note that further amendments to the ICA are still expected to come into force this year. Most importantly, these include a new mandatory pre-closing filing regime for all investments in prescribed sectors where certain specified criteria are met. While the prescribed sectors have yet to be identified, they are expected to include the technology areas identified on the Sensitive Technology List.

*NB: Minister Champagne has been replaced by Minister Anita Anand, who is now responsible for decisions under the Investment Canada Act.