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An Ottawa-based artificial intelligence company has turned down U.S. government contracts, citing growing tensions between Canada and the United States. Caseway, which builds AI tools for legal and defence applications, says it will instead focus on Canadian defence opportunities and explore markets in Europe and Taiwan.
CEO Cites Political Tensions Behind the Decision
Caseway CEO Al Vigier said the current political climate made him uncomfortable pursuing U.S. government work. “I’m not comfortable going in and helping the U.S. with their AI needs at the same time that they’re threatening us,” Vigier told Global News. He also pointed to U.S. President Donald Trump’s repeated suggestions that Canada should become the “51st state” as a factor in the company’s decision.
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The move came at a real cost. Caseway had secured one of only eight presentation slots at a major industry conference. That spot offered access to investors capable of funding significant growth rounds. “It’s massive. I mean, that’s where all the largest companies get their funding from,” Vigier said. “It can be $50 million. It can be $100 million rounds.”
Despite the financial sacrifice, Vigier said the decision aligned with the company’s values and long-term direction. Caseway now plans to concentrate on Canadian defence contracts while pursuing international partnerships in Europe and Taiwan.
Canada’s Broader AI Infrastructure Challenge
Caseway’s situation reflects a wider problem facing Canada’s AI sector. The industry remains heavily dependent on infrastructure located in the United States. Sean Mullin, a technology and innovation policy expert at the University of Toronto, highlighted the risks this creates. “How can we make sure that we’re not completely dependent on maybe an unreliable United States?” he said.
Mullin noted that the concern is especially serious for sensitive government and defence data. “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 question has taken on new urgency as Canada reassesses its reliance on its southern neighbour.
The federal government has committed to investments in quantum computing, data centres and upgrades to Canada’s electricity grid. However, building that capacity could take years and require billions of dollars. Meanwhile, Canadian companies continue to depend on U.S.-based systems.
Experts Call for a Focused Canadian Strategy
Mullin said Canada is unlikely to produce companies on the scale of OpenAI or Anthropic. Instead, he argued, Canada should identify specific areas within the AI supply chain where domestic companies can add genuine value. “Our strategy should be to find places within that supply chain where we can add value,” he said.
He also encouraged Canadian companies to work with partners rather than try to build every part of the AI ecosystem independently. That collaborative approach, he suggested, offers a more realistic path to global competitiveness.
On the funding side, Vigier said conditions in Canada remain difficult. “On the investment side, it’s really bad. It’s hard to raise capital in Canada,” he said. In response, the federal government stated that entrepreneurs should not have to leave Canada to build globally competitive companies. The office of the federal AI minister pointed to several funding commitments and plans to position the federal government as an anchor customer for Canadian AI firms.
Defence Spending Offers a Potential Opening
Vigier said increased federal attention to defence could create new opportunities for companies like Caseway. “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 an early test of Ottawa’s ability to move quickly enough to support domestic firms.
“This is a test to see if this kind of rapid procurement can work in Canada,” Vigier said. The outcome could signal whether the federal government is prepared to act as a meaningful partner for Canadian AI companies navigating the shift away from U.S. dependence.
As Canadian AI firms look to reduce their reliance on the United States, the central question remains how quickly Canada can build the domestic industry and infrastructure needed to support them. For Caseway, that journey is already underway.
