About 40% of the inputs used in Canadian construction are imported, and roughly a quarter of all inputs come from the United States, according to the Canadian Construction Association’s fall economic report released October 28. With counter-tariffs on most U.S. steel and aluminum now at 50% and diesel up about 80% in a year, an owner’s cost risk depends more on where a project’s materials come from than on any headline index.
What happened
The CCA published its Fall 2026 Construction Quarterly Economic Insights on October 28. Construction GDP grew 1% in the second quarter, after two quarters of decline, bringing activity back to roughly where it was a year earlier. Non-residential building costs were up 3.5% year over year in Q2, and steel-intensive divisions such as structural steel framing and metal fabrications were up more than 8%.
The new part is the trade exposure analysis, based on 2024 data:
- Of about $139 billion in manufactured inputs used in construction, $83 billion (60%) came from Canada, $35 billion (25%) from the U.S., $12 billion from the rest of the world, $8 billion from China and $1 billion from Mexico.
- Engineering construction is the most exposed: in communications and oil and gas work, about 40% of inputs come from the U.S. For residential construction it is about 21%.
- Canadian counter-tariffs on most U.S. steel and aluminum rose from 25% to 50%, and a 25% surtax now applies to certain wood cabinets and vanities imported from outside North America.
- Diesel is above $2.75 a litre, about 80% higher than a year ago.
- Shipping steel beams from Ontario to Western Canada costs 3 to 10 times more than sourcing from the U.S. A $100-million federal program launched in August reimburses 50% of eligible interprovincial rail and marine freight for Canadian steel.
The CCA’s Nicole Emmett told The Canadian Press the industry “remains resilient,” but the report calls the 2027 outlook mixed, and the federal budget is expected in November.
View the data
| Origin | Value (share) |
|---|---|
| Canada | $83B (60%) |
| United States | $35B (25%) |
| Rest of world | $12B (8%) |
| China | $8B (6%) |
| Mexico | $1B (1%) |
The tariffs in play right now
Two sets of tariffs matter to an owner, and they work in opposite directions.
What Canada charges on U.S. imports. Since September 8, Canadian counter-tariffs of 15%, 25% or 50% apply to about $27.6 billion of U.S. goods across more than 600 product classifications. This is the side that lands directly in your tender prices when a contractor buys U.S.-made material. The building-related items include:
- 50%: steel and aluminum products such as bars, rods, wire, tubes and pipes (up from 25%), and plastic floor coverings.
- 25%: sawn softwood lumber, steel and aluminum sanitary ware, carpets and textile floor coverings.
- 15%: air conditioners, fork-lift trucks and other industrial handling equipment.
Ottawa says the new tariffs are not meant to stack on top of the existing ones, and the remission framework still accepts requests for relief.
View the data
| Product category | Counter-tariff |
|---|---|
| Steel & aluminum products | 50% |
| Plastic floor coverings | 50% |
| Sawn softwood lumber | 25% |
| Steel & aluminum sanitary ware | 25% |
| Carpets & textile flooring | 25% |
| Air conditioners | 15% |
| Fork-lifts & handling equip. | 15% |
What the U.S. charges on Canadian exports. This side hits Canadian manufacturers and suppliers rather than your invoice directly, but it shapes their pricing and capacity. On October 30, the U.S. revised its 50% Section 338 list: some plywood, paper products, certain machinery and packing materials came off, and more than 100 products went on, including carpet, vinyl flooring, paint, window air conditioners and valves. An importer filed the first legal challenge to the Section 338 tariffs at the U.S. Court of International Trade on October 20, so these lists could change again.
What a tariff does to a package. A simple example: if $1 million of a structural steel package is U.S.-origin steel, a 50% counter-tariff can add up to $500,000 to that package, unless the contractor gets remission or switches to a domestic or other non-U.S. supplier. At 25% the same $1 million costs $250,000 more, and at 15% it costs $150,000 more. The tariff applies to the value of the imported goods, not the whole contract, which is why knowing the origin of each major item matters more than the national index.
What it means for owners
Your index is not your project. A 3.5% national average hides a wide spread. By building type, Q2 cost growth ranged from 5.4% for factories to 1.8% for schools. By city, Toronto was 3.2% while London was 8.2%. A steel-framed distribution centre full of imported equipment and a concrete school are not facing the same market, so escalation set from one national figure will be wrong for both.
View the data
| Building type | Year-over-year change |
|---|---|
| Factory | 5.4% |
| Bus depot | 4.7% |
| Warehouse | 4.1% |
| Low-rise apartment | 4.1% |
| Shopping centre | 3.7% |
| All non-residential | 3.5% |
| Office | 2.0% |
| High-rise apartment | 2.0% |
| School | 1.8% |
Tariff risk sits in a handful of line items. On most commercial and institutional projects, the import exposure is concentrated: structural steel, metal fabrications, switchgear and transformers, elevators, rooftop units, curtain wall and some millwork. They are a small share of the trade packages, but they carry most of the volatility. Owners who know which ones they are can manage them; owners who don’t are pricing blind.
Buying Canadian is not automatically cheaper or faster. Domestic sourcing avoids counter-tariffs, but freight can wipe out the saving outside Ontario and Quebec, and Buy Canadian, Buy Ontario and other provincial preference policies add paperwork that contractors will price. Our guide to the Buy Canadian steel rules covers the procurement side.
The contrarian point: tariff remissions can become a hidden windfall. The federal government runs remission frameworks for counter-tariffs and steel surtaxes, with refunds generally paid within 90 days, according to the CCA. If your contractor priced the tariff into a stipulated sum and later recovers it, most standard contracts say nothing about who keeps that money. On programs we’ve supported, the owner rarely asked.
Fuel is the quiet driver. Earthwork was one of the fastest-rising divisions in the quarter, up 2.2% from Q1. Site work, excavation and haulage are diesel-heavy, and federal fuel excise relief currently runs only to January 31, 2027.
What to do now
- Map your import exposure. List your top 20 cost packages and ask bidders to declare the country of origin, and the tariff rate they have assumed, for major materials and equipment in their tender forms. It costs nothing and tells you where your risk sits.
- Write tariffs into the contract on purpose. Treat a change in tariffs or duties after a fixed baseline date as a defined change, with both upward and downward adjustment, and require any remission refunds to be credited back. Our escalation clause guide shows how to set thresholds and caps.
- Buy the volatile items early. Where the schedule allows, pre-purchase or lock pricing on structural steel and long-lead electrical equipment, and price freight as a separate line.
- Carry a separate tariff and fuel allowance. Keep it visible, not buried in general contingency, so the board can see it and release it if tariffs ease. See how much contingency to carry.
- Set a review date after the federal budget. Budget 2026 is expected in November. Re-run your escalation assumptions once it lands.
FAQ
How much of Canadian construction material is imported?
About 40% of construction inputs were imported in 2024, with the U.S. accounting for roughly 25 percentage points of that, according to the Canadian Construction Association’s Fall 2026 report.
What tariffs does Canada charge on U.S. construction materials?
Since September 8, 2026, Canadian counter-tariffs apply to about $27.6 billion of U.S. goods. Steel and aluminum products such as bars, rods, wire, tubes and pipes face 50%, sawn softwood lumber and carpets 25%, and air conditioners 15%. Remission is available on request.
Which construction costs are most affected by tariffs?
Steel-intensive divisions such as structural steel and metal fabrications, which rose more than 8% year over year in Q2 2026, along with imported equipment and some millwork. Engineering projects in communications and oil and gas are the most exposed to U.S. inputs.
The bottom line
National cost indices tell you the weather. Your import exposure tells you whether your own roof leaks. Owners who map where their big-ticket materials come from, and write tariffs into their contracts deliberately, will carry less contingency and fight fewer claims. Want a second look at your project’s exposure? Book a 30-minute call.
Sources: Canadian Construction Association, Construction outlook: recovery meets continued uncertainty (October 28, 2026); Canadian Construction Association, Construction Quarterly Economic Insights, Fall 2026 (PDF); The Canadian Press via CP24, Rising costs, trade risks cloud Canada’s construction outlook (October 29, 2026). Department of Finance Canada, Canada announces targeted countermeasures (August 25, 2026); Blakes, Canada imposes counter-tariffs on C$27.6 billion of U.S. imports (August 27, 2026); Deseret News, Canadian tariffs are changing (October 27, 2026); Flexport, Canada tariffs change again on October 30 (October 27, 2026). Tariff-cost examples are our illustrative calculations. Cover graphic: Benjamin R. Consulting, using CCA data.