Newly released data from Statistics Canada shows a continued drop in cross-border travel, with Canadian residents making 22 per cent fewer return trips from the United States in January 2026 compared to the same month last year. The figures mark the 13th straight month of year-over-year decline, adding pressure to businesses that rely heavily on cross-border movement.
Among the hardest hit are Canada’s land border duty free stores, which depend almost entirely on outbound traffic into the U.S. The ongoing downturn is creating significant challenges for small businesses operating in border communities nationwide.
The Frontier Duty Free Association (FDFA), which represents 31 land border duty free stores across the country, is urging federal officials to move forward on targeted measures already submitted to the Department of Finance.
“These figures reflect a temporary downturn driven by political and trade tensions, not a permanent shift in travel behaviour,” said Barbara Barrett, Executive Director of the FDFA. “With fair regulatory treatment, the duty free sector will continue to be a viable contributor to Canada’s border economy fulfilling their mandate and repatriating sales to Canada that are otherwise lost to the U.S. What we need now is action that allows Canadian operators to compete on equal footing with their U.S. counterparts.”
Duty free stores at Canada’s land borders operate as federally licensed, export-only businesses under the oversight of the Canada Border Services Agency. However, industry representatives say these businesses face structural tax disadvantages compared to U.S. competitors and are not treated in line with other Canadian export sectors.
In response, the FDFA has proposed a targeted tax-alignment plan to the Department of Finance. The proposal aims to address inconsistencies in export treatment, correct long-standing imbalances, and improve competitiveness with U.S.-based duty free operators.
“These are not broad spending requests,” Barrett added. “They are precise regulatory and financing adjustments that would correct asymmetrical treatment and allow independent Canadian small businesses to compete fairly.”
The federal government has previously indicated a commitment to supporting small businesses amid ongoing trade and travel disruptions. Despite this, duty free operators — many of which have been in operation for more than four decades — say they have yet to benefit from current support measures tied to the trade environment.
The FDFA is calling on Ottawa to act quickly, warning that continued delays could deepen the strain on businesses already disproportionately affected by fluctuating cross-border travel.
