Canadian AI company turns away from U.S. government work amid trade tensions

An Ottawa-based artificial intelligence company says it is turning away from opportunities with the U.S. government as tensions between Canada and the United States raise questions about Canada’s reliance on its southern neighbour for AI investment and infrastructure.

Caseway, which develops AI tools for applications including legal and defence-related work, says it is instead focusing on Canadian defence and seeking opportunities in markets such as Europe and Taiwan.

“I’m not comfortable going in and helping the U.S. with their AI needs at the same time that they’re threatening us,” Caseway CEO Al Vigier told Global News.

He added that U.S. President Donald Trump’s repeated suggestions that Canada should become the “51st state,” helped drive the company’s decision.

The decision meant walking away from what Vigier described as a significant opportunity for the company. Caseway had secured one of just eight presentation spots at a major industry conference, giving it the chance to pitch investors capable of financing large growth plans.

“It’s massive. I mean, that’s where all the largest companies get their funding from,” he said. “It can be $50 million. It can 100 million dollar rounds.”

But Caseway’s move away from U.S. opportunities also highlights a broader challenge for Canada’s AI industry, which remains heavily reliant on infrastructure south of the border.

“How can we make sure that we’re not completely dependent on maybe an unreliable United States?” said Sean Mullin, a University of Toronto expert focused on innovation and technology policy.

Mullin said that reliance is particularly relevant when it comes to sensitive government and defence information.

“Government operations, top secret data — should these things be on clouds or go through AI models that are not in the control of your domestic country?” he said.

The federal government has committed to investments in quantum computing, data centres and improvements to Canada’s electricity grid. But building that capacity could take years and require millions, if not billions, of dollars.

Mullin said Canada is unlikely to build companies on the scale of AI industry leaders such as OpenAI and Anthropic and should instead determine where Canadian companies can contribute within the industry’s broader supply chain.

“Our strategy should be to find places within that supply chain where we can add value,” he said.

He said Canadian companies should also work with partners rather than attempt to build every component of the AI ecosystem themselves.

For Caseway, the strategy means concentrating on Canadian defence while looking abroad to Europe and Taiwan for other opportunities.

Vigier said one of the biggest hurdles remains finding the money to grow.

“On the investment side, it’s really bad. It’s hard to raise capital in Canada.”

In a statement, the federal government said entrepreneurs should not have to leave Canada to build globally competitive companies. The federal AI minister’s office pointed to several funding commitments and plans to use the federal government as an anchor customer for Canadian AI companies.

Vigier said increased federal attention to defence could provide an opportunity.

“The Canadian government, for the first time, is really focusing on defense. They’re putting large amounts of money behind it,” he said.

He also pointed to a recent procurement effort as a test of whether Ottawa can move quickly enough to support domestic companies.

“This is a test to see if this kind of rapid procurement can work in Canada,” Vigier said.

The challenge now, as Canadian AI companies look to reduce their reliance on the United States, is how quickly Canada can build the domestic industry and infrastructure needed to support them.