Key Takeaways:
- Duty free shops in southwestern Ontario are experiencing a significant decline in sales due to the U.S. trade war and a drop in cross-border travel.
- Shops at the Windsor-Detroit Tunnel and Point Edward (Sarnia) to Port Huron crossings have reported drops in business in the 30 per cent range year over year.
- The decline in cross-border travel is attributed to a 30.2 per cent decrease in return road trips to the U.S. by Canadian residents in October, according to Statistics Canada.
- The Frontier Duty Free Association is pleading for help from the federal government in the form of repayable loans for shops in need and relief from red tape that hampers competition.
- Duty free shop owners are concerned about the future of their businesses and are calling for support to prevent closures and job losses.
Introduction to the Crisis
The owners of duty free shops in southwestern Ontario are facing a significant crisis due to the ongoing U.S. trade war and a decline in cross-border travel. The shops, which are located at major border crossings such as the Windsor-Detroit Tunnel and Point Edward (Sarnia) to Port Huron, have reported drops in business in the 30 per cent range year over year. This decline is having a devastating impact on the shops and their owners, who are struggling to stay afloat. Abe Taqtaq, the owner of a duty free shop at the Windsor-Detroit Tunnel, expressed his concerns about the future of his business, stating that he may have to make difficult decisions if the situation does not improve.
The Impact of the Trade War
The U.S. trade war has had a significant impact on cross-border travel, with a 30.2 per cent decrease in return road trips to the U.S. by Canadian residents in October, according to Statistics Canada. This decline has been consistent since March, with passenger vehicle traffic from Windsor to Detroit down by 5.9 per cent between January 1 and November 30 of this year compared to the same period last year. The decline in traffic is not limited to the Windsor-Detroit crossing, with passenger vehicle traffic from Point Edward (Sarnia) to Port Huron down by 27 per cent for the same time period. The trade war has made it more expensive and inconvenient for Canadians to travel to the U.S., resulting in a significant decline in cross-border travel.
The Struggle of Duty Free Shops
Duty free shops are feeling the brunt of the decline in cross-border travel, with many shops reporting significant declines in sales. Tania Lee, the co-owner of Blue Water Duty Free in Sarnia, Ontario, and the president of the Frontier Duty Free Association, stated that the drop in traffic is harming duty free shops right across the country. The association has reported that one store has already closed in Woodstock, New Brunswick, and that stores in British Columbia and Manitoba are teetering on the edge. The shops had already survived the COVID-19-related border closures and were paying off their COVID-era loans, only to be hit with more hardship. The situation is heartbreaking, with many shop owners fearing that they will not make it through the winter.
The Call for Help
The Frontier Duty Free Association is pleading for help from the federal government in the form of repayable loans for shops in need. The association is also calling for relief from red tape that hampers competition, such as laws requiring compliance with Canadian domestic labelling requirements even though the shops are selling exclusively into the U.S. market and must sell products that are compliant with U.S. rules. Lee stated that the association is motivated to get help for the shops and is committed to showing up in Ottawa at any meeting that they can get. The association is hopeful that the government will provide the necessary support to prevent closures and job losses.
The Future of Duty Free Shops
The future of duty free shops is uncertain, with many owners fearing that they will not be able to survive the decline in cross-border travel. Taqtaq stated that he remains optimistic that business will pick up again, but he understands why people do not want to travel to the U.S. The shops are calling on Canadians who do cross the border to consider stopping by their stores, in the hopes that this will help to mitigate the decline in sales. However, without support from the government, it is unlikely that the shops will be able to survive. The situation is critical, and the government must take action to support the duty free shops and prevent closures and job losses.