As the artificial intelligence build-out accelerates across sectors of the economy, we face a consequential policy choice.

Federal AI funding should be tied explicitly to industries that drive Canada’s gross domestic product (GDP) and exports, like energy, mining and advanced manufacturing, or Canadians will increasingly feel the already sharp bite of trade deficits and related inflation.

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AI policy is economic policy.  If it is not aligned with the sectors that pay Canada’s bills, it risks becoming branding rather than nation-building. Ottawa’s $300-million Compute Access Fund aims to expand compute power for small and medium-sized businesses (SMEs) developing made-in-Canada AI products. The objective is commendable, but the program provides no clear direction about which sectors matter most to Canada’s long-term prosperity.

Policymakers and industry leaders speak about building sector-specific AI applications, yet this dialogue has not translated into concrete federal priorities. Consultations on Canada’s AI strategy held last year, with engagement results released earlier this month, made no reference to aligning AI with our core growth industries or the SMEs within their supply chains.

Leading sectors must come first

At a time of geopolitical instability, when Ottawa is focused on defence spending and supply chains, our leading sectors must come first. Energy industries, including oil and gas, nuclear and renewables, account for roughly 10-12% of GDP and 20-25% of exports. Advanced manufacturing represents about 10% of GDP and as much as 40-60% of exports, while metals and mining contribute around 5% of GDP and more than one-fifth of exports, including aluminum and steel.

There is a growing assumption that expanding Canada’s AI tech sector, or directing major funding toward emergency defence supply chains, will automatically strengthen the economy. Supporting AI firms is not the same as growing the economy. If AI investments do not improve productivity in already proven GDP sectors, it will not materially strengthen Canada’s long-term competitiveness.

Canada already demonstrates what applied, export-oriented AI leadership can look like.

Applied AI should be prioritized

Through Ontario Tech University’s Brilliant Energy Institute, researchers are working with the International Atomic Energy Agency to develop AI tools for predictive maintenance and anomaly detection in nuclear power systems, including small modular reactors. This work improves safety, reliability and operational efficiency, reinforcing Canada’s position as a global nuclear leader.

This example should inform federal policy. Rather than competing with hyperscalers, Canada should prioritize applied AI in sectors where we already possess industrial depth, regulatory expertise and export scale.

Advanced manufacturing, supported by AI adoption and powered by our energy strengths, could form the backbone of an emerging defence supply chain.

Federal funding should first strengthen the industries where Canada already demonstrates global export leadership, earnings and jobs. For more than two decades, Canada has faced declining research and development investment, underinvestment in applied AI within leading sectors and an overreliance on housing to drive GDP growth. These weaknesses will not be corrected through scattered AI funding or summit talking points. They will be addressed by using AI to raise productivity in the industries that already define our economy.

Government need not pick winners and losers. The market has already spoken. A serious AI strategy should reinforce our energy, mining and advanced manufacturing sectors, not dilute them. Canada’s long-term outlook holds promise, but only if we invest wisely now.

Dr. Steven Murphy is the president and vice-chancellor at Ontario Tech University 

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