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The Canadian Armed Forces underwent a period of decline after the 1968 Canadian Election. Pierre Trudeau's foreign policy shifted Canada's post World War Two strength to a NATO policy critics described as offering "all aid, short of help". Canada's international military commitments further declined with the centralizing of power over the Canadian Armed Forces into the Privy Council Office, taking control over from the Department of National Defense. This action led to excessive spending and over regulating that resulted in "merciless disengagement from broad alliance priorities", particularly in Europe.

The effects of the severe cuts in military expenditure under the Mulroney government was demonstrated with Canada's lack of significant military participation in the Gulf War. David Charters. a director of the University of New Brunswick's Centre for Conflict Studies after the Gulf War concluded that the international perception of Canada as a peacekeeping force, and not a belligerant force, had been maintained. The subsiding of the Cold War led Finance Minister Michael Wilson to announce budget cuts that would lead to the scaling down or closing of 14 Canadian Forces bases. The April 1989 Budget by Wilson also outlined a plan to cut the budget of the Department of National Defence by $2.74 billion over five years. This action combined with the cancellation of the Canada-class submarine led the Canadian Armed Forces to become a secondary priority for future governments.

In 1993 the Somali affair seriously damaged the reputation of the Canadian Armed Forces. The beating to death of a Somali teenager by two Canadian soldiers while on a humanitarian mission and attempted cover up by military leadership resulted in the disbanding of Canada's elite Canadian Airborne Regiment.

Canada's military prestiege and reputation suffered further harm under the Chrétien, Martin, and Harper Governments during the Afghanistan War. At the height of Canada's military contribution to the conflict from 2007 to 2009 in Kandahar Province, the lack of ground troops required Canadian commanders to focus efforts on urban centres, leaving the rural areas without a consistent Canadian presence. This lead to the area surrounding the City of Kandahar to be controlled by warlords, criminals, and insurgents. Limited resources and a few thousand Canadian soldiers on the ground meant that limited change could occur especially within an area of 54 000 km or roughly the size of New Brunswick. On March 17, 2009 Greg Gutfeld insulted the Canadian Military when "Lt. 'Gen. Andrew Leslie, chief of land staff, suggested in early March that the military may need a year-long break in operations due to personnel and equipment shortages. The event drew significant Canadian national attention and a subsequent apology from Greg Gutfeld.

In an attempt to have a balanced budget heading into the 2015 Canadian Election the Harper government by 2014-2015 promised to slash $1.1 billion from the roughly $20 billion defence budget. In order to achieve this the government delayed the procurement of equipment for seven years, allowing the triming of hundreds of millions of dollars from the defence budget each year.

Canada has been unable to return to its previous levels of international engagement after the significant cuts in the late 1960s and 70s. During the period equipment in the Airforce, Army, and Navy was left unmaintained and unreplaced. The Canadian Armed Forces under successive governments as a result have been unable to recover to previous levels of international military engagement.

Criticism over the direction and changes to the purpose of the Canadian Armed Forces since the 1960s and onward is held by some in leadership positions. The "unification, bilingualism and peacekeeping had, in addition to overt civilianization of (the) [ National Defence Headquarters], seriously eroded the professional foundations of army educational and training establishments set up after the [ Second World War]". Decisions for the Canadian Armed Forces since the Trudeau Government of the late 1960s and onward have continued to be made by those in officially approved highly bureacratized slots.

The Trump Administration has been critical of NATO allies not reaching the targeted 2 percent of GDP funding on Military spending, particularly of the Canadian Government.