Trade War Strains Cross-Border Economy as Tourism Drops in New York, Sales Crash in Canada’s Duty-Free Shops

Western New York’s tourism sector and Canadian duty-free retailers are both reeling from a sharp downturn in cross-border travel, as political tensions between Canada and the United States continue to escalate. The combination of rising tariffs, diplomatic strain, and public sentiment has led to a substantial drop in Canadian visits to the U.S.—with ripple effects felt on both sides of the border.

Patrick Kaler, CEO of Visit Buffalo Niagara, revealed that cross-border travel from Canada fell by 14% in February, with early projections suggesting similar declines in March. “We rely on Canadian visitors for up to 40% of our tourism,” Kaler said. “This decline is already forcing tough decisions for local businesses, especially as we approach peak season.”

The impact isn’t limited to U.S. tourism hotspots. Canadian duty-free stores, particularly those at land border crossings, are also seeing devastating losses. Barbara Barrett, Executive Director of the Frontier Duty Free Association, reported that sales have plummeted between 40% and 50% nationally, with more remote crossings experiencing up to 80% declines.

“These are small, often family-run shops that are vital to rural communities,” Barrett explained. “They don’t have the luxury of online sales or delivery services. Without support, many could shut down.”

After a brief rebound from the pandemic, duty-free shops were just regaining stability when political discourse around tariffs and annexation threats reignited, discouraging Canadians from traveling south. Many Canadians are now opting for staycations or domestic travel, further reducing the volume of cross-border traffic.

According to Statistics Canada, the number of Canadians returning home by car from the U.S. in March 2025 dropped nearly 32% compared to the same month in 2024—marking the third consecutive month of year-over-year decline.

As travel uncertainty persists, both U.S. tourism advocates and Canadian border retailers are urging their respective governments to offer economic relief and restore public confidence in cross-border mobility. “It’s not just about dollars,” Barrett emphasized. “It’s about sustaining the communities and families that rely on these crossings.”