Canada - USA - Shoppers Going One Way

Canadian retailers say prices are higher here than in the US. in part due to higher labour costs, rents, import duties and suppliers' prices. A relatively small population spread over a vast geography costs more to service.

BMO found most of the narrowing in the price gap over the last six years is due to the decline in the value of the Canadian dollar relative to the US. greenback.

To eliminate the price gap completely, the Canadian dollar would have to fall to 88 cents US., Porter said in an interview.

Apart from the currency, the price gap between the two countries is narrowing, very gradually, the report found

Ottawa's attempt to reduce the price gap by cutting import tariffs on some items — including baby clothes and hockey gear— have had only a limited impact on overall pricing. A small minority profits from this narrow tarrif relief. Free trade what a non bonus for Canadian shoppers. If you live close to the border the benifits are there with a short drive to the USA border cities.

The result is more Canadians are crossing the border to shop, contributing to an $18-billion deficit in tourism, or roughly 1 per cent of Canada's gross domestic product, the report says. Meanwhile, fewer Americans come to Canada.

As recently as a decade ago, more Americans visited Canada than Canadians visited the US. Now, there's only one American tourist for every three Canadians hopping across the border.

With the US. economy under a political cloud and the US. Federal Reserve Board likely to keep interest rates on hold for longer than expected, the Canadian dollar is like to remain high for some time, the bank predicts.