Understanding lawfare is essential for Canadian strategy because coercion occurs through contracts, regulations, and funding rules rather than force. Canada must balance its security concerns with open science, economic resilience, and normative independence; how it navigates this legalized battlefield will determine whether it remains an adaptive middle power or becomes a passive subject of others’ laws.

With respect to Canada-China relations, U.S. economic measures and national security rhetoric aimed at constraining China blur the line between alliance and subordination for Canada. On the one hand, with 76 percent of Canadian exports going to the U.S. in 2023, Washington holds significant leverage to align Ottawa’s China policy with its own. On the other hand, Canada risks being sidelined in key industries without deeper bilateral collaboration with China. 

The 2018 arrest of Huawei CFO Meng Wanzhou in Vancouver at Washington’s request, followed by China’s detention of Michael Kovrig and Michael Spavor, illustrate how Canadian sovereignty is tied to U.S. strategic aims. Canada’s 2022 ban on Huawei’s 5G equipment—after the U.S. placed Huawei on its Entity List—show how U.S. policy and law shape ally behavior.

The 2021 U.S. Innovation and Competition Act (USICA) reframes science and technology as geopolitical arenas, funding domestic R&D, creating a new NSF technology directorate, securing supply chains, restricting China’s technology access, and pressuring allies to follow suit. Canada has mirrored this trend through restrictive investment-screening reforms and legislation such as Bill C-34 to limit Chinese involvement in critical minerals, telecom, and infrastructure.

USICA references Canada more than 30 times, in pursuit of cooperation on NORAD modernization, research security, and collaboration in aerospace and defence. Yet its emphasis is primarily domestic, directing $75 billion to semiconductors within a $280-billion science and technology package. By contrast, U.S. firms spent $529 billion on R&D in 2021, while Canadian firms spent just $5.2 billion—a gap that threatens long-term competitiveness.

To respond, Canada’s federal research agencies—CIHR, NSERC, and SSHRC—overplayed their hand by tightening research-security rules through two major frameworks: the Sensitive Technology Research and Affiliations of Concern (STRAC) policy (2024) and the National Security Guidelines for Research Partnerships (NSGRP) (2022). STRAC targets risks associated with open science and dual-use technologies, barring federal funding for sensitive research involving individuals linked to foreign military or security institutions. It relies on two lists—the Sensitive Technology Research Areas (STRA) and Named Research Organizations (NRO)—to identify high-risk sectors and entities. The NSGRP requires applicants with multiple private-sector partners to complete risk assessments and mitigation plans.

Although these instruments claim to safeguard research integrity, they in fact function as pre-emptive containment, limiting collaboration in high-growth fields such as AI, quantum computing, and biotechnology. Their effects are most acute regarding China, the world’s largest scientific producer; 85 of the 103 NRO-listed entities are Chinese. China hosts 26 of the top 100 global S&T clusters, compared with Canada’s three, and invests more heavily in R&D. 

Restricting such partnerships strains universities already facing falling international enrolment and funding pressures. Huawei alone contributed $56 million to Canadian research in 2019; the University of Waterloo’s 2023 termination of its Huawei partnership left a significant gap that remains unfilled. Security safeguards may therefore undermine Canada’s innovation capacity. A dearth of funding diversity also plays into America’s USICA strategy of binding Canada more closely to its own security priorities. Over time, we can expect to see more U.S. research funds and American researchers finding their way into Canadian Universities. 

Canada’s legal-security reorientation extends beyond research and development. Investment-screening reforms and legislation such as Bill C-34 aim to limit Chinese involvement in critical minerals, telecommunications, and infrastructure. While these measures are assumed to protect strategic assets, they also narrow Canada’s economic options considerably.

Even domestic laws unrelated to security have been weaponized for geopolitical signaling. Ottawa’s ban on foreign residential property ownership, extended to 2027, disproportionately affects Chinese investors and is viewed by Beijing as political. The legislation that has flowed from the Public Inquiry on Foreign Interference takes a more worrying path with lopsided and shortsighted policies that will limit public discourse on foreign interference, thereby creating a climate where legitimate criticism of Canada’s “allies” is stifled.

Much like the U.S., Canada selectively chooses when to hold states responsible for foreign meddling, unfairly labelling some diaspora as larger threats than others. For example, the repeated focus on individuals of Chinese origin contrasts with the reality that many Canadians exhibit loyalties to their homeland such as those from India, Israel, and Ukraine. This influence is evident in Canada’s foreign policy decisions, including its stance on Palestinian statehood, the closure of the embassy in Tehran, and military support to Ukraine—each shaped, to some extent, by diaspora lobbying.