Canadians shun U.S. car trips on tariffs, weak Canadian dollar

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Growing trade war tensions were likely “the dominant factor” in a big drop in cross-border car trips from Canada to the United States in February, a Big Six bank economist says.

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The number of Canadians who crossed the border by car dropped 23 per cent in February compared to a year ago, according to Statistics Canada, which described the drop as a “steep decline.”

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The agency also said it was the second year-over-year decline since March 2021.

“I don’t doubt for a minute that a lot of people chose not to travel to the U.S. as a result of the simmering trade war that really broke open at the start of February,” Douglas Porter, chief economist at BMO Capital Markets, said. “That probably was the dominant factor, and it does look to have dissuaded people from visiting the U.S. or at least going over for a short-term visit.”

U.S. President Donald Trump’s attacks on Canada via tariffs and potential policies have riled Canadians, with several polls showing that people opted to either cancel or postpone travel to the U.S. For example, 56 per cent said they were ready to cancel or avoid travel to the U.S., according to a Leger poll in early February.

Porter said there were other factors at play in February, such as bad weather and a weaker dollar.

Many Canadians were hit with huge amounts of snow in some parts of the country last month, which he said likely discouraged cross-border car trips.

The Canadian dollar has also been roiled by Trump’s actions. The loonie is down 7.1 per cent since Sept. 24, 2024, which is when his prospects to take the White House started to improve. It’s currently trading at 69.1 cent U.S.

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In February, the Canadian dollar hit its lowest closing level since 2016 on the eve of Trump’s first deadline to impose 25 per cent tariffs on most imports from Canada and 10 per cent on all energy imports.

That deadline was ultimately pushed back one month, taking effect on March 4, only to be walked back two days later for goods compliant under the Canada-United-States-Mexico Agreement.

Porter estimated that personal travel to the U.S. was worth $23 billion in 2023, the most recent figure available from Statistics Canada.

Dan Ciuriak, a research fellow at the C.D. Howe Institute, cautioned it’s difficult to draw hard conclusions from one month’s worth of data from the agency, but there are other data sources that appear to suggest a similar pattern.

For example, Flight Centre Travel Group (Canada) Inc. is reporting a 40 per cent year-over-year drop in bookings in February, and Cascade Gateway, a border crossing between British Columbia and Washington State, had a 30 per cent decline in southbound trips, also in February.

“There’s all kinds of reasons to anticipate that when we look back on this in a year’s time, we will see a very significant, sustained decline in cross-border traffic between Canada and the United States,” he said.

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Ciuriak is also hearing anecdotal reports of people returning from shopping in the U.S. and being hit with a “sizable bill” due to the 25 per cent tariffs Canada imposed on $30-billion worth of various American goods.

Another change that could further anger Canadians planning to travel to the U.S. is that they may be affected by a new policy that forces them to register if they are south of the border for more than 30 days.

The U.S. policy came into effect under the Immigration and Nationality Act on March 9.

“So for all those reasons, we should be expecting to see a fairly significant decline in cross-border movement of people,” he said.

• Email: gmvsuhanic@postmedia.com

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