Windsor, Sarnia duty free shops struggling amid cross-border traffic drop
Passenger vehicle traffic to Detroit and Port Huron was down in March according to U.S. statistics
Canadian operators of duty free shops in Windsor and Sarnia say business is slumping thanks to the United States' trade war with Canada.
The owner of Tunnel Duty Free in Windsor says he's feeling tremendous pressure to keep the family business afloat.
"In 1986, my parents opened the first store in Ontario here in Windsor," Abe Taqtaq said.
"They leveraged everything, put everything on the line … The last thing I want is to be the one that's at the helm … if it continues to go downwards."
Duty free stores face a unique challenge among businesses impacted by the U.S. trade war, Taqtaq said: they can only sell goods destined for export to the United States and they don't have the option to look for new markets.
Yet passenger vehicle traffic to the U.S. has been in decline this spring.
Cross-border traffic down year over year
Passenger vehicle traffic across the Windsor-Detroit border was down six per cent in March compared with March of last year, according to data from U.S. Customs and Border Protection. Vehicle trips across the Ambassador Bridge and through the Windsor-Detroit tunnel dropped from approximately 300,000 to approximately 282,000.
Passenger traffic across the Blue Water Bridge and on the Algonac ferry dropped nearly 25 per cent in March compared to March of last year – from around 80,200 trips to around 60,200 trips.
The co-owner of Blue Water Duty Free in Sarnia said her business is down 27 per cent in May so far compared with the same period last year. But that's only part of the story.
"When you see passenger [vehicle traffic statistics for] March versus the year before, that goes against March last year when we had disrupted traffic because of [construction on] the bridges," said Tania Lee, who also serves as president of the Frontier Duty Free Association, which advocates for Canada's 32 land border duty free stores.
"If we look at our sales versus 2019, that's when you see the real picture … I'm down 42 per cent."
It's been a bad five years for the store, she said, starting with the border closures that accompanied the COVID-19 pandemic and continuing with bridge closures due to construction.
But Lee and Taqtaq both said their businesses are resilient, and they've survived hard times before.
There are still plenty of people headed to Detroit each day, Taqtaq said, and he's doing everything he can to entice those travelers to shop at his store.
"If you don't spend your money at a duty free shop, it's going to be spent in the United States," he said.
"So it's the last opportunity to actually keep your money in Canada and help the Canadian economy."
Stores say they need financial aid, regulatory changes
Taqtaq is not giving up on the business, he said, but he might need to make some "difficult decisions" in the coming months.
He hopes that any government relief for businesses affected by the trade war is available to duty free shops, he said – something that hasn't always been the case during previous economic crises.
Lee echoed that sentiment.
The hardest hit stores, she said, need targeted support in the form of interest-free loans or other measures such as the ones introduced during the COVID-19 pandemic, when the federal government offered wage subsidies and loans coupled with partial forgiveness.
LISTEN | After 40 years, is Windsor's Tunnel Duty Free shop on the brink of closing?
Longer term, the government needs to make changes to how duty free shops are regulated to allow them to be more competitive with their American counterparts, she added.
By way of example, she said stores must currently comply with Canadian domestic labelling requirements even though they are selling exclusively into the U.S. market and must sell products that are compliant with U.S. rules.
That prevents them from selling products if their suppliers don't allow retailers to tamper with their labelling or brands.
In other cases, consumers simply balk at buying products with makeshift labels slapped on them, Lee said.
Both Lee and Taqtaq say they worry about what will happen if the trade war drags on.
For Lee, the concern is about people changing their habits: no longer making trips to Trader Joe's or having a mailbox on the other side of the border for Amazon packages.
"The longer it goes on, the more you disrupt it, and the longer it takes to get back," she said.
For Taqtaq, the concern is more about the relationship between the two countries.
"We always refer to ourselves as the two-nation destination," he said.
"And that idea of going to the United States and traveling and then wanting to celebrate that camaraderie between the two nations and the two cities, that's definitely dissipated over the … last few months.
"And that's the part that worries me. How long is it going to take for that to come back?"
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With files from Windsor Morning