Fewer Canadians are crossing the border — and duty-free shops are paying the price
WASHINGTON, D.C. — Canadians still have their elbows up when it comes to travelling south of the border, and those fewer trips are having a disastrous effect on a key business: duty-free shopping.
Tariff spats, Donald Trump’s “51st state” rhetoric and encouragement by political leaders to “buy Canadian” have led many Canadians to forgo American products and vacations.
In 2025, Canadians made 22.9 million trips to the U.S., down 28 per cent from 31.9 million the year before, according to Statistics Canada, and the trend continues . In January this year, there were just 2.1 million Canadian return trips made to the U.S., down 22 per cent from January 2025.
Following the pandemic’s drop in sales and the slow recovery, duty-free shops were just beginning to see a post-COVID recovery when the Trump effect hit. Now, they have seen 13 months of dramatically less business.
“The highway is dead. There are no vehicles out there,” said Simon Resch, the second-generation owner of the Emerson Duty Free in Manitoba, who has seen monthly revenue drops between 30 and 50 per cent since 2024 — and a whopping 75 per cent decline since 2019. He blames Trump’s rhetoric and the resulting anti-U.S. sentiment .
Canada’s land border duty-free shops can only sell to customers heading into America, so reduced America-bound travel is putting immense pressure on the 31 remaining stores. There were 32, but one store, Woodstock Duty Free, closed its doors last summer after 30 years in business, its owner citing the plunge in cross-border traffic and sales as the reason.
The remaining shops have had to dramatically cut back staff. Resch, for example, had 35 employees in 2019 but can now only employ four, including himself.
Cameron Bissonnette, owner of two duty-free shops, one in Osoyoos, B.C. and another in the East Kootenays region, has also seen a dramatic drop in sales and has had to lay people off, cutting staffing back to himself and one manager per store.
With the travel pattern continuing, Bissonnette is worried about how long his businesses can survive.
“If this summer doesn’t materialize, I’m going to have to make some very difficult decisions come October or November,” he said.
Unlike during COVID, when Canada’s duty-free shops could access business relief programs, no such help is available today.
“We could not find worse partners than the federal government of Canada if we went looking for them,” said Resch.
Bissonnette also finds it unfair that his sales are depressed through no fault of his own.
“There were certain elected politicians who were telling people not to go to the USA … It’s not like I’m running my business poorly.”
“During COVID, we had access to the wage subsidy, the rent subsidy, the forgivable loan. Now we’re seeing zero support from the federal or provincial government.”
The traffic patterns mean fewer sales for duty-free shops in the U.S. as well, most of which are run by Duty Free Americas (DFA), which did not respond to outreach for this article.
DFA reported a boost in revenue last year linked to their airport expansions, but Bissonnette said his U.S. competitor at the Osoyoos border crossing recently shut down, which suggests that the land border model for U.S. operators is also under stress.
Canada’s duty-free owners, however, are owned by individuals, not a big corporation, and they face an additional burden – what they refer to as a misapplied domestic excise tax.
The Frontier Duty Free Association (FDFA), which lobbies on behalf of the 31 Canadian land border duty-free stores, has been pushing the federal government for a realignment of the excise tax so that duty-free shops don’t have to pay the same federal excise as domestic sales on goods being exported and consumed in the U.S.
FDFA Executive Director Barbara Barrett explains that the duty-free shops are at a tax disadvantage compared to their American counterparts because they pay a domestic excise tax of around $40 per cigarette carton. Their U.S. competitors, just a stone’s throw away, operate tax-free.
“Our only competitor is the United States … (it’s) the last opportunity to spend money in Canada that they would otherwise spend in the U.S.,” said Barrett. “But because we have this tax on us, we’re not competitive.”
The excise tax was imposed on duty-free cigarette sellers back in the early 2000s at $10 a carton, which owners saw as unfair but were able to manage. Now, says Resch, it’s up 380 per cent, making it impossible for shops to compete.
“I believe the illicit market (for cigarettes) is more than 50 per cent of all consumption,” he said, noting that his teenage stepdaughter can buy a carton of cigarettes for $30 and have it delivered. Meanwhile, the cheapest landed cost for tobacco at his warehouse now ranges from $50 to $75, and that’s before adding his margins.
“By the time it hits our warehouse, we’re already well priced out of the marketplace,” Resch added.
The FDFA has also lobbied for bridge or low-interest loans from the federal government to help keep the shops open. So far, however, no aid has arrived.
“They’re working on a solution … but we haven’t seen any action as of yet,” said Barrett. “We heard the prime minister promise that he wouldn’t leave small businesses behind and … that they would allow us to be competitive with the U.S., and we’re holding them to that.”
Without support and a change to the excise tax, Barrett fears that duty-free shopping could soon cease to exist on the Canadian side of the border.
“If we lose them, we won’t get them back,” she said. “They’re an important part of the Canadian tourism industry. They’re an important part of the Canadian economy. They’re in the very important parts of very small communities across Canada.”
Resch, for one, thinks the business model could be viable in a post-Trump world, but he says an even bigger overhaul is needed for the industry – namely, an expanded list of products duty-free shops can sell.
“Is having a business on the border viable, in my view? Absolutely, but only if our partners in the federal government work with us to change the 40-year-old land border duty-free model,” Resch said
He would like to see the model changed to allow duty-free shops to target new customers – commercial truck drivers — and to offer the sale of new products, especially gasoline.
“So far, (the government has) remained steadfast that they won’t change it. They’re not interested in changing it.”
National Post
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