Small Canadian businesses could get bottom line boost as travel to the U.S. drops

As more and more Canadians appear to be sidestepping travel to the United States, it could spell an economic boon for small and medium-sized businesses on this side of the border.

Dan Kelly, president of the Canadian Federation of Independent Business, tells 1130 NewsRadio there are a number of things that haven’t been working in the favour of Canadian business owners. The economy has been tanking, the loonie isn’t very strong, overall costs have been rising for some time, and people aren’t spending as much.

“Will the fact that Canadians are staying closer to home help enormously? Absolutely. This is terrific news,” said Kelly. “This is something that, of course, Canadian retailers, those in the travel and tourism industry, have really wanted for a long, long time.”

Kelly adds that the trade war, which Canada did not start, could have a positive flow on effect, too.

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“U.S. retail goods are becoming more expensive for Canadians and Americans in their home market. So, as a result, those tariffs that the U.S. is imposing would have to be paid by Canadians if they are going to go and try to do some cross-border shopping, and those tariffs don’t exist at the same levels when goods come in directly to Canada from overseas,” he explained.

“For many years, retail prices were generally lower in the U.S., but that’s not as much the case anymore.”

Kelly calls it a “mixed blessing” that the trade war and angst between the two countries may actually help local businesses survive.

“If they’re staying closer to home, that can increase consumer spending, and we’re hoping to see some of that this coming summer. Remember, the travel and tourism industry has been hit pretty hard,” he said.

“There are a lot fewer international guests coming into Canada, compared to the past. We’ve also limited our immigration, so it’s nice to see Canadians are staying closer to home and in many respects supporting the travel and tourism industry, retailers, and hospitality businesses right across the country.”

The CFIB says things like inflation, increasing minimum wage, and overall rising costs have been hard on small businesses.

“I think more than anything some of the increased consumer demand from Canadians that are not willing to travel to the U.S. may offset some of the cost increases that businesses are facing and allow them to perhaps increase their prices a tiny bit to try and make a decent margin,” explained Kelly, who can’t speak to whether this will stir up seasonal job creation this summer.

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And as encouraged as he is, Kelly says it’s too early to call this a win for Canadian businesses this summer.

“Supply and demand rules still work. How big the impact will be, how measurable it will be, remains to be seen.”

Kelly admits he has changed his plans this summer and instead of going abroad, is travelling from his home in Toronto to Kelowna.

“One of the challenges for a lot of small businesses is that there is a capacity limit and a practical limit in terms of your ability to serve Canadians. This is going to be a busy year, and we are already hearing about a tick up in hotel prices, travel prices as a result of that. It was pretty hard to find available accommodations [in Kelowna] and the prices are not for the faint of heart right now to come and see that beautiful part of the world.”

He reminds everyone who is thinking about travelling anywhere in Canada just how badly businesses need their help.

“The average small business, even now, is still $100,000 in debt more than they were at the start of the [COVID-19] pandemic. We’ve seen a record number of business bankruptcies coming out of the pandemic because a lot of businesses managed to keep the lights on during those tough COVID years, but afterwards, have not seen consumer spending bounce back to the levels needed for their business.”

Kelly adds that just because Canadians aren’t heading south, Americans are still coming north and says that will also be a big help.

Canadians are staying home in droves: report

A new TD survey shows many Canadians are looking to stay local and spend local.

It finds 89 per cent of people think it’s important to support small businesses this summer, while 64 per cent plan to travel within the country. It also discovered 63 per cent of Canadians will research stores, eateries and attractions ahead of time, and 73 per cent will consider travelling to a destination to visit a business they previously looked up.

The big bank is also projecting tourism to boom this summer.

“It’s encouraging to hear that Canadians are planning to support local small businesses as part of their vacation plans this summer, as it helps both entrepreneurs and our local economies,” said Julia Kelly, vice president of small business banking at TD. “It’s particularly welcome news, as many of our small business customers have been concerned about consumer spending slowing down.”

All of this is backed up by official numbers that show people are avoiding travelling south of the 49th parallel, either by air or land.

Last month, 1130 NewsRadio reported a big drop in cross-border trips. Data shared by the Ministry of Transportation and the Washington State Department of Transportation showed southbound, non-commercial traffic at the Peace Arch and Pacific Highway crossings over the May long weekend dropped by roughly half compared to Victoria Day weekend in 2024.

Close to 40,000 vehicles used the non-commercial and NEXUS lanes over that period in 2024 — this year it was 23,000.