Where fabrication work happens and where the material originates are two different questions. In the current tariff environment, buyers who conflate them are working from an incomplete picture.
The Current Tariff Landscape
Steel and aluminum trade between Canada and the United States hasn’t been this complicated since Section 232 tariffs were first imposed in 2018. The current environment is significantly more expensive than what most buyers were quoting against two years ago.
The United States imposed Section 232 tariffs of 50 percent on steel and aluminum imports, Canada included, calculated on the full customs value of imported goods for products with metal content of 15 percent or more by weight. CUSMA doesn’t exempt Canadian steel or aluminum from Section 232. A common assumption in procurement circles is that the trade agreement provides a buffer. It doesn’t. Canada responded with counter-tariffs on US steel and aluminum that have escalated alongside the American measures, with the most recent increase taking effect September 8, 2026.
We’re in a bilateral tariff situation where steel and aluminum crossing the border in either direction carries a significant cost premium. For buyers comparing Canadian and American fabricators, the landed cost of material is no longer a straightforward line item.
What Canada Produces and What It Doesn’t
Canada produces roughly 12 million tonnes of steel annually and ranks among the larger producers globally. Domestic production is substantial in volume, but there are shortfalls in specific product categories.
Canadian mills don’t produce the full range of products fabricators use daily. Certain structural shapes, specialty tubular products, and grades outside the core production profiles of major domestic mills are routinely sourced from elsewhere because Canadian capacity simply doesn’t exist or doesn’t meet the required specifications. Imports account for approximately 61 percent of Canada’s total steel consumption, drawing from both the United States and offshore sources.
The aluminum situation illustrates the clear differences between what Canada extracts and what it manufactures. Canada is the fourth-largest primary aluminum producer in the world, with 3.3 million tonnes of production in 2024 and a significant competitive advantage in low-carbon smelting due to hydroelectric power. What Canada lacks is meaningful flat-rolling capacity. Most aluminum plate and sheet used in Canadian fabrication is imported, often from US mills rolling aluminum ingot originally smelted in Canada. When those rolled products re-enter Canada, they do so subject to tariffs on both sides.
Canada’s position in the aluminum supply chain is, in several respects, contradictory. The country produces primary material at scale, exports the majority of it to the United States, and then imports the finished flat-rolled product back at significant tariff cost.
What a Canadian Fabricator Is Buying
Fabricators don’t typically purchase steel directly from mills. Material moves through service centers and distributors that stock product, process it to length or width, and sell to fabricators as required. Companies like Varsteel, Russel Metals, New Metals, ASA, and Brunswick Steel sit between the mill and the fabrication shop.
The distribution layer obscures origin in ways buyers rarely consider. Steel in a finished Canadian-fabricated component may have been melted in Ontario, rolled in Ohio, and distributed out of Alberta. The fabricator’s location tells a buyer where the work was done, but nothing about where the material came from or what tariff costs were embedded in it before the steel reached the shop floor.
Requesting a country-of-origin breakdown at the quoting stage gives buyers the information they need before price and schedule are already committed.
Material Test Reports and Country of Origin
Every heat of steel produced at a mill comes with a material test report (MTR). The MTR documents the chemical composition and mechanical properties of the material, confirms it meets the relevant specification, and records the country where the material was melted and rolled.
Heat numbers on the MTR link directly back to the original production records at the mill. A fabricator who traces material properly can tell a buyer the country the steel came from, which mill produced it, and when it was produced.
The documentation standard in Canada has become more stringent. As of September 22, 2025, commercial invoices are no longer sufficient to prove the country of melt or the country of smelt and cast. Mill test certificates or producer-issued reports are required. Distributor-issued statements don’t meet the standard. Buyers who accepted commercial invoices as origin documentation in the past will find their supply chain records are no longer compliant.
Requesting MTRs before or during fabrication is a better approach. Retroactively documenting origin on a completed assembly is difficult, and in some procurement contexts, insufficient documentation results in a 25 percent surtax applied to the imported material.
When Country of Origin Is a Contractual Requirement
Some procurement contracts exclude materials from specific countries. The exclusions are driven by sanctions, government policy on certain trading partners, human rights considerations, and concerns about material certification and specification compliance in specific markets.
Countries commonly excluded in Canadian procurement include China, Russia, Iran, and North Korea. Exclusions related to Russia and North Korea are tied to sanctions regimes. Chinese steel and aluminum face a 25 percent surtax under Canada’s Steel and Aluminum Goods Surtax Order, and federal procurement policy has moved steadily toward excluding non-FTA-partner countries from eligibility. Aluminum smelted or cast in Russia is subject to a 200 percent US Section 232 tariff, which flows through to Canadian buyers of affected products.
Government procurement in Canada has also shifted under the Buy Canadian Policy introduced in November 2025. Contracts over $25 million where steel, aluminum, or lumber value exceeds $250,000 must prioritize Canadian-sourced material. The requirement applies to the material and the contractor’s location.
Buyers who need to enforce country exclusions must build them into the purchase order at the outset and confirm compliance at the MTR level. Assuming a Canadian fabricator automatically uses compliant material isn’t sufficient due diligence.
What to Look for in a Fabrication Partner Right Now
Fabrication location and material origin have never been the same thing. Tariffs, tightening documentation requirements, and the Buy Canadian Policy have made the distinction costly to ignore.
A fabricator with clean material documentation, distributor relationships including domestic supply, and a process for tracing heat numbers to mill of origin represents a different procurement risk than one without those practices in place.
Atlas traces material origin on every job and provides MTRs for all material in an assembly as a standard deliverable. For projects with country-of-origin requirements or tariff-sensitive supply chains, the documentation chain starts at material purchase.
Working through a project with origin documentation requirements or wanting to understand how current tariffs are affecting your fabrication costs? The Atlas team is here to help.
Common Questions About Steel Tariffs and Material Origins
Before a purchase order goes out, buyers sourcing fabricated components should be raising the following questions:
Where does the material originate for the specific products in this job?
A fabricator’s location tells a buyer where the work was done, not where the steel or aluminum came from. Some shapes and specifications have limited or no domestic Canadian supply, and a fabricator working from available distributor stock may be sourcing from the United States or offshore. Asking about material origin by product type gives a more accurate picture of what is in the assembly and what tariff exposure is embedded in the price.
Can you provide MTRs for all material in this assembly?
MTRs should be standard deliverables. A fabricator who is uncertain whether MTRs are available for a given job is signaling an incomplete documentation chain. Requesting confirmation before the job is awarded means you avoid having to retroactively document origin on a finished assembly.
Are there country of origin exclusions on this project?
Exclusion requirements belong in the purchase order at the quoting stage. A fabricator who receives exclusion requirements after fabrication has begun has limited options. Communicating requirements upfront allows the fabricator to confirm whether compliant material is available for the specifications required.
How is tariff cost reflected in the quote?
In the current environment, material crossing the border in either direction carries a significant tariff premium. A quote built on pre-tariff material pricing, or one that doesn’t account for recent escalation, won’t hold through the job. Buyers should ask fabricators to confirm when material pricing was last updated and whether the quote is subject to material cost adjustment.
Does the distributor the fabricator uses stock domestic material for the products on this job?
Some product categories have readily available Canadian supply through domestic distribution. Others don’t. The distributor a fabricator uses, and the inventory they carry, directly affects what origin documentation is possible and what the real cost of Canadian sourcing looks like on a specific job.