NBC5 In Depth: Mending frayed relationships with Canada

A Democratic Joint Economic Committee report comparing 2025 to 2024 shows a sharp drop in Canadian travel and spending across the U.S. northern border—crossings into New Hampshire fell about 30%, into Vermont more than 28% and across New York’s northern border 17%, while Vermont saw a 49% decline in Canadian credit‑card spending June–September; in New York’s North Country 83% of businesses reported fewer Canadian customers and 35% of those cut staffing. Lawmakers and local leaders attribute the decline to a weaker Canadian dollar and to White House trade rhetoric and tariffs—Sen. Maggie Hassan blamed “reckless tariffs and needless provocations,” while the administration argues tariffs protect U.S. manufacturing—and business owners like Burlington retailer April Cornell say foot traffic has materially softened. In response, bipartisan governors and chambers have launched outreach campaigns such as “We Know Canadians As” to restore cross‑border ties, underscoring near‑term downside to border economies and mounting political pressure to repair trade and diplomatic relations.

Analysis

A Joint Economic Committee minority report comparing 2025 to 2024 documents a sharp decline in Canadian travel and spending that is materially affecting northern-border economies: border crossings from Canada into New Hampshire fell ~30%, into Vermont more than 28%, and across New York's northern border were down 17%, while Vermont saw a 49% drop in Canadian credit‑card spending between June and September. In New York's North Country, 83% of businesses reported fewer Canadian customers and 35% of those firms cut staffing, with local leaders in Plattsburgh saying declines may be even larger than regional averages.

Lawmakers and business leaders attribute the downturn to a weaker Canadian dollar and to U.S. trade rhetoric and tariffs; Democrats on the committee blamed "reckless tariffs," while the administration maintains tariffs support domestic manufacturing. Retailers with cross‑border foot traffic exposure, like Burlington-based April Cornell (celebrating 50 years and noting materially lower Canadian footfall), are pivoting to messaging and flexible sales strategies while preserving direct‑to‑Canada channels.

The combination of FX pressure, reduced tourist volumes and tariff uncertainty creates near‑term demand and staffing risk for small and mid‑sized retail and leisure operators in border regions, and elevates political risk that could affect trade flows. Investors should treat consumer spending metrics from border states and policy developments on tariffs and diplomacy as leading indicators for revenue and employment revisions in regional retail and tourism-exposed corporates.

Key Decisions for Investors

• Reduce or hedge near‑term exposure to small and regional retailers and travel/leisure operators heavily dependent on Canadian foot traffic,
• Prioritize companies with diversified sales channels or direct‑to‑consumer fulfillment to Canada, as they are likelier to offset retail footfall losses,
• Monitor Canadian dollar moves and state‑level credit‑card spending (Vermont June–Sept -49%) as leading indicators for revenue recovery or further deterioration,
• Watch federal trade policy signals and bipartisan outreach campaigns closely; any de‑escalation of tariffs or rhetoric should be a catalyst to re‑risk border‑exposed names,
• Use staffing reductions (35% of affected businesses cut staff) and local chamber data (e.g., North Country 30% traffic decline) as triggers for earnings‑forecast downgrades and potential short opportunities