Prime Minister Mark Carney said increasing defence spending to meet NATO targets could come with benefits for Canadians, but also potential 'trade-offs.'

Prime Minister Mark Carney is among the leaders around the table at the annual leaders' summit where the proposal is being discussed.

The two-day NATO summit is set to focus on boosting allies' defence spending, but is starting a day after Iran retaliated against U.S. military strikes on its nuclear facilities.

While the main talks on NATO defence spending won't take place until Wednesday, Prime Minister Mark Carney is expected to discuss the issue during bilateral discussions.

The five per cent goal is made up of two parts, including agreeing to a hike pure defence spending to 3.5 per cent of GDP, up from the current target of at least two per cent,

Prime Minister Pedro Sánchez wrote in a letter that “committing to a five per cent target would not only be unreasonable, but also counterproductive."

The Prime Minister's Office said the leaders will work to "deepen the Canada-EU relationship across all sectors," including trade and defence.

NATO Secretary-General Mark Rutte is set to call on member countries on Monday to increase their missile and air defences by 400 per cent.

Merz described his Oval Office meeting and extended lunch with Trump as constructive but also candid, noting that the two leaders expressed different views on Ukraine.

David McGuinty said the federal government will have more to say "very soon" about its alliance spending commitments and will be "making announcements in this regard."

The “capability targets” lay out goals for each of the 32 nations to purchase priority equipment like air defence systems, long-range missiles and artillery.

By 2029, Russia may have reconstituted its forces sufficiently to attack NATO territory, according to estimates by senior military officials at NATO.

The debate on defence spending is heating up ahead of a summit of U.S. President Donald Trump and his NATO counterparts in the Netherlands in June.

As Canada has sought to reduce its reliance on U.S. gear, it has been in talks with the European Union about a possible "security and defence partnership."

Federal party leaders and candidates in the upcoming election say they are committed to getting Canada to meet NATO's current defence spending target of two per cent of GDP.