Canadian Retailers Suffer Increased Cross-Border Shopping
Thanks to a strong loonie and new increases in cross-border shopping allowances, Canadians are shop at American stores that aren't open (yet) in Canada. They're also crossing the border to take advantage of groceries, which despite the loonie, are still cheaper in the U.S.
The import tax on finished goods means that prices are still higher in Canada for the same item. That includes hockey equipment, footwear, linens and basic foodstuff like eggs, cheese and milk.
The Bank of Montreal's deputy chief economist said earlier this year that cross-border shopping is increasing and that is costing the economy money. He says the new rules plus other factors will "unleash a wave of Canadians cross-border shopping this summer in numbers not seen in two decades."
This has prompted the Retail Council of Canada and Chambers of Commerce along the border to ask the federal government to eliminate the import taxes on finished goods.
"The government's decision to increase duty exemptions on goods bought in the U.S. is salt in the wounds of retailers in border communities," said Diane J. Brisebois, RCC's President and CEO in a release. "They already face too many obstacles to competition, such as import duties, as high as 18 per cent on sports equipment. Now Canadians are being offered yet another incentive to cross border shop."
So with tax imports and increased border allowances, (up to $200 from $50 for a 24-hour visit), what are Canadians buying? According to a recent article from Global News, the five top things Canadians buy are:
- Shoes - athletics, dress and children's shoes
- Lawn mowers - gas and electric
- Huggies - but only if you buy them in Canada at full price. The Global article says Huggies Little Movers costs approximately $5 more in Canada but you can often find coupons that can be layered upon sales.
- Coffee makers especially the high-end machines
"Many retailers in border communities are struggling just to stay in business," said Carolyn Bones, President of the Niagara Falls Chamber of Commerce in the release. "The federal government needs to act immediately to remove barriers to competition, so that Canadians want to shop and keep their tax dollars here in Canada."