A Canadian artificial intelligence company is turning away from opportunities with the U.S. government amid growing trade tensions between Ottawa and Washington, choosing instead to focus on Canadian defence projects and expand into markets in Europe and Taiwan. Caseway, a Vancouver-based company that develops artificial intelligence tools for applications including legal and defence-related work, says its decision reflects concerns about the political relationship between Canada and the United States. The company’s chief executive, Al Vigier, said he was uncomfortable helping meet American government AI needs while the United States was threatening Canada. Vigier also pointed to U.S. President Donald Trump’s repeated comments suggesting that Canada should become the 51st American state as a factor behind the decision. The move represents a significant strategic shift for a company operating in an industry where American investors, computing infrastructure and government contracts play an important role. Caseway had secured one of only eight presentation spots at a major industry conference, offering an opportunity to pitch investors capable of providing substantial funding. Vigier said walking away from the opportunity was a difficult decision because American investment can support funding rounds worth tens or even hundreds of millions of dollars. Instead, the company plans to concentrate on Canadian customers, particularly in the defence sector, while exploring opportunities in Europe and Taiwan. It is also looking at American businesses that have operations in Canada, allowing it to maintain some commercial relationships without directly pursuing U.S. government work. The decision highlights a broader challenge facing Canada’s AI industry: reducing dependence on the United States without losing access to the investment, infrastructure and expertise needed to compete internationally. Sean Mullin, a University of Toronto expert in innovation and technology policy, said Canada’s reliance on American technology infrastructure raises important questions about the handling of sensitive government and defence information. He argued that Canada needs to identify areas in the AI supply chain where domestic companies can contribute meaningfully rather than attempting to build every component of the industry independently. Sensitive government records and defence information can raise concerns when they are processed through infrastructure or AI services controlled outside Canada. Developing domestic capacity could give Canadian institutions greater control over where information is stored and processed, although building secure infrastructure requires significant investment and time. The federal government has announced investments in quantum computing, data centres and electricity-grid improvements to support the country’s technology sector. However, experts warn that developing the infrastructure needed to compete with the largest American AI companies could take years and require billions of dollars. Vigier has also identified access to capital as a major obstacle for Canadian technology companies. Although Canada has a strong research community and growing AI sector, domestic companies can struggle to secure the large funding rounds available in the United States. The federal government has said Canadian entrepreneurs should be able to build globally competitive businesses without leaving the country. Officials have pointed to funding commitments and plans to make the government an important customer for Canadian AI companies, including through defence-related procurement. For Caseway, the expansion of Canadian defence spending could create opportunities to develop and deploy its technology at home. Vigier said the government’s willingness to move quickly on procurement would be an important test of whether domestic companies can receive the support they need to grow. The company’s decision comes as trade disputes and policy changes have prompted Canadian businesses to reconsider their exposure to the American market. However, completely separating Canada’s AI industry from the United States would be difficult because of the close integration of technology supply chains, investment networks and cloud-computing services across the border. Caseway’s shift therefore reflects both a political decision and a business challenge: finding alternative sources of investment and customers while building technology that can compete internationally. Whether more Canadian companies follow a similar path may depend on how quickly Canada can expand domestic investment, infrastructure and government demand for locally developed AI. The move places a spotlight on a wider debate over Canada’s technological sovereignty and economic resilience. As artificial intelligence becomes increasingly important to national security, government operations and defence, policymakers face growing pressure to ensure that Canadian companies have the resources and opportunities to develop critical technologies at home.