During dry storage of spent nuclear fuel, the stainless steel (SS) canisters used for containment are cooled by ambient air that often carries fine salt aerosols. These airborne salts can accumulate on the canister surface and, in the presence of humidity, deliquesce to form concentrated chloride brines that promote localized corrosion and ultimately stress corrosion cracking. The present work investigates the initiation of pitting corrosion and the subsequent pit-to-crack transition in SS304H under simulated canister-relevant environments. Three surface preparation methods, including hand grinding, machine grinding, and milling, were used to create specimens with varying degrees of surface deformation and residual stress. A MgCl2-rich brine was employed to reproduce the chemistry expected after deliquescence at approximately 40 % relative humidity. To generate a range of pit morphologies, specimens were exposed to controlled atmospheric corrosion under constant relative humidity and temperature. The results showed that machine milling introduced a substantial near-surface deformation and tensile residual stress, leading to the formation of the most severe pitting corrosion and long cracks. Additionally, dealloying was found in machine-ground specimens exposed to the simulated brine after only two days. The results highlight the importance of residual stress on localized corrosion and the pit-to-crack transition in atmospheric conditions.