As of September 8, 2026, the Government of Canada has adopted the United States Surtax Order (2026) that charges a surtax (colloquially called a tariff) on goods imported from the United States to Canada. The surtax is already in effect and will impact a variety of construction goods and materials imported from the United States. Because of that, all construction contractors and material suppliers need to plan now how they will address potential cost escalations and delays on current projects and bids for new work.
The new surtax is in response to tariffs the United States imposed on goods imported into the United States from Canada starting on August 22, 2026. Like the United States’ tariff, Canada is applying the surtax on the same goods targeted by the tariff. Many goods targeted are products commonly used in construction for commercial, industrial and residential projects, including:
- Steel and aluminum;
- Floor and ceiling coverings;
- Wood products;
- Plywood and laminated wood;
- Carpets and other floor coverings; and
- Appliances and electronics.
The surtax is either 15%, 25% or 50% of the value of the duty as calculated by the Customs Act.
Contractors and suppliers should expect that the surtax will increase construction costs and potentially delay delivery of material imported from the United States. As such, contractors and suppliers ought to review their current contracts, as well as projects they intend to bid on, and plan for how the new surtax will be addressed.
For current projects, it is crucial to review contracts for clauses that set out how material cost escalations and delay claims are to be handled, with particular attention on any written notice requirements. For example, the general conditions of standard-form CCDC contracts require contractors to give timely written notice of claims for price increases under GC 6.6 and written notices of delay within 10 working days after the commencement of the delay under GC 6.5. These timeframes are short, and, depending on the project, pre-emptive notice to the owner may be prudent.
For new projects, it is important that contractors consider whether the surtaxes will impact the contract price and schedule before submitting bids. For example, in the standard-form, stipulated price CCDC contract, a contractor’s fixed price is deemed to include all taxes and custom duties in effect at the time of bid closing. Under GC 10.1.2, the contractor is only entitled to seek an increase in the contract price to cover the costs of new taxes and custom duties that change after the time of bid closing. Since the Surtax Order is already in effect, this means that, starting immediately, all contractors need to account for the new surtax in their bid pricing or risk being on the hook for the costs of unexpected duties.
If you are a contractor or material supplier that believes your work may be impacted by the new surtax, now is the time to act. Timely notice to the owner or amendments to current bids may save you thousands in a costly mistake.
For more information about the new United States Surtax Order (2026), visit the following links:
- Customs Notice 26-23: https://www.cbsa-asfc.gc.ca/publications/cn-ad/cn26-23-eng.html
- United States Surtax Order (2026): https://orders-in-council.canada.ca/attachment.php?attach=48943&lang=en