Good news for cross-border shoppers...
Duty-free exemption limits increase starting June 1st, meaning cross border shopping could see a notable upswing.
A new BMO Capital Markets special report on the change to duty-free limits on cross border shopping has been released.
According to BMO deputy chief economist Douglas Porter, “Canadians will flock to Maine, Michigan and Minnesota en masse, as well as the border states of New York, Washington and New Hampshire” in numbers not seen in years, thanks to the increase to the duty-free limits.
Travellers visiting south of the border for more than 24 hours will now be allowed to bring home $200 worth of merchandise duty-free, up from $50. Stays longer than 48 hours will now allow $800, whereas the previous limit was $400 for stays of a week and $750 for anything longer.
This has the potential to harm Canadian retailers in an big way, as the problem of higher prices in Canadian stores has long been an issue.
The report notes that “Our latest random sampling of a basket of goods finds that Canadian retail prices are roughly 14 per cent above U.S. levels, before taxes and adjusted for the exchange rate.”
This price difference has long given shopping across the border a big appeal, but has become even more prominent during the past four years when the slow economy has made every penny count to consumers.
Canadian consumers have taken issue with what is perceived to be unfair pricing for years, particularly since American retail chains started opening up here and charging more for the same products.
Retailers say they have very little control over pricing, as they face higher tariffs for finished goods and are charged more by suppliers.
The Retail Council of Canada has recently stepped in as manufacturers like Roots, Barrymore Furniture and Canada Goose have asked for help, fearing what these latest changes could mean for their stores.
A ‘buy Canadian campaign’ is said to be in the works, encouraging locals to shop at home. The council is also looking into introducing a bill that will offer financial incentives to people shopping in Canada, and to Canadian retailers. (I'd like to see how THAT'S supposed to work!!!)