May saw a significant jump in retail and restaurant sales, according to the Census Bureau. On Twitter, President Trump celebrated the reported 17.7% increase over April as the “biggest one-month increase of ALL TIME.”
However, that spike in sales mostly missed the Bellis Fair mall in Bellingham, Washington. The mall’s core was closed by Jay Inslee, Washington state’s Democratic governor, and stayed closed until June 8. Unfortunately, if the mall were open, a good percentage of regular customers would have been barred from entry. Why? Because they couldn’t get into the country.
The United States-Canada border has been effectively closed to most travelers since March 21, though it is still permeable for the shipments of goods, and some people can still hop over it via air travel.
The border was supposed to be restricted for one month to help both nations slow the spread of COVID-19. The U.S. and Canada agreed to extend the restriction for another month. The current nonessential travel restriction is set to last until July 21. Many Canadians would like for it to last much longer.
According to a May survey by the Angus Reid Institute, only 19% of Canadians wanted the border to open up after June 21, the previous deadline.
In contrast, 42% wanted it closed until September, 26% wanted it closed until the end of the year, and 13% wanted it closed well into next year. These were the figures before America’s recent domestic unrest brought potentially COVID-19-spreading protests, riots, looting, and violence to dozens of cities.
The extended closing, with more likely to come, is negative economic news for many U.S. cities and counties that run along Canada’s border.
Laurie Trautman is director of the Border Policy Research Institute. She told the Washington Examiner that “the Western B.C.-Washington crossings [are], broadly speaking, comprised of Canadians who are primarily making short, frequent trips to locations in Whatcom County,” which includes Bellingham and the Bellis Fair mall.
According to the research, Trautman said, about “25% of those trips are for the primary purpose of shopping.”
Many borderites would call that a low estimate. Canadians all across the U.S.-Canada border come into the U.S. in everyday, nonpandemic times, for many reasons, but one huge prompt is more economical prices.
America has lower gas prices due to lower taxes, lower milk prices because of real competition among dairies, and no value-added tax to bump up prices across the board. Shipping is cheaper due to competition, and, before America’s recent trade warring with China, at least, there are far fewer protective tariffs on goods.
Canadians who live near the border frequently head south to fuel up their vehicles, buy dairy products, send and receive packages at U.S. rates, and stock up on clothing, food, and supplies at lower prices.
This “economic tourism” is driven by prices and habits. When the Canadian dollar, the loonie, is more robust, Canadians make the trip in more significant numbers and spend more. The opposite applies when the Canadian dollar is weaker. But it’s possible to upset this equilibrium.
“Changes in border policies following the 9/11 terrorist attacks weakened the relationship between the exchange rate and cross-border trips for multiple years following 2001. This highlights how external events and policy responses can influence cross-border flows,” the report said.
In practical terms, the longer the border stays closed to nonessential travel, the more likely that closure is to reduce cross-border travel for some time and have lasting adverse effects on U.S. border economies.
The Washington Examiner asked several large chain retailers that do significant business near U.S. borders if they are worried about the longer-term effects the border restriction could have on business.
Spokespersons for Costco and Target said they were too busy dealing with coronavirus logistics to give a specific answer. A spokesman for the grocery store Albertsons declined to answer, citing a forthcoming initial public offering and the Securities and Exchange Commission’s mandated “quiet period.”
However, these possible harmful effects of reduced Canadian traffic keep Garth Baldwin up at night. Baldwin is a councilman in Blaine, Washington, which abuts the Canadian border. Blaine has dozens of shipping and brokerage firms currently hurting, and the whole town with them.
“We were on the very brink of a financial renaissance of sorts,” Baldwin told the Washington Examiner. “In the past year or so, we have experienced new construction, new businesses, and promised development that we have lacked for decades. Before the COVID-19 pandemic and shutdown, we were poised for a boom here in Blaine. Now, I’m not sure what the future holds.”
