Local businesses in the Greater Trail region might feel the pinch this month after a June 1 rise in the duty-free limit tempts shoppers to make a run for the border for all those cheaper consumer goods in the U.S.
With changes introduced in the 2012 federal budget, the duty-free limit on visits of more than 24 hours quadrupled, rising from $50 to $200 as of Friday.
In addition, any visit longer than 48 hours allows a Canadian to return with duty-free goods worth up to $800 — up from $400 for up to one week, and $750 for longer than a week. The allowance for duty-free goods remains at zero for stays of less than 24 hours.
The duty-free change could harm local retailers and the talk around Waneta Plaza during coffee Monday morning was the deleterious effect the change could have.
“I personally don’t agree with it,” said Heather Nesbitt, the manager of women’s clothing store Suzanne’s in the mall. “For the small town, border towns, like us it will hurt some people.”
Any extra trips to the U.S. would represent more money lost from local cash registers, and magnify any business problems Greater Trail businesses are having with the dollar and price gaps between the two countries on most goods.
But that is not the case for everyone.
Being this close to the U.S. could have had a negative effect on sales at electronics store The Source, but its prices are competitive and, as a result, their Canadian customers have been loyal, said manager Thomas Hoy.
“I don’t think (the change) is going to affect us much at all,” he said. “Really, in Trail, people think about shopping locally.”
He said young people might go across the border to shop, but those middle aged and up want to shop local and support a local business.
Hot on the heels of a shop local campaign in Trail, the change in duty-free limits did not surprise Trail and District Chamber of Commerce executive director Maggie Stayanovich.
“Like anything new, it creates a bit of interest,” she said. “You can’t force people one way or another … but we strongly urge people to support the local community because those businesses support them. A lot of times people don’t realize the impact of that choice.”
Because the 24-hour rule has not changed, it has been reported that federal Finance Minister Jim Flaherty was not particularly concerned about the effect of cross-border shopping.
However, according to a report last month under the title “Cross-Border Shopping: Here Comes the Flood,” it was estimated that Canadian retail prices were about 13 per higher than in the U.S., down from about 20 per cent last year.
Even so, a slightly lower Canadian dollar right now could see some traffic coming back to Canada, said Stayanovich.
“That works two ways,” she said. “We have a lot to offer American shoppers as well.”