Following the change, the number of travellers returning from the United States by car after an overnight stay (likely for shopping trips) rose significantly.16 While the volume of overnight car trips displays a significant seasonal pattern (with peaks around the summer months), the average level increased from around 150,000 per month in the five years prior to the duty change to nearly 270,000 per month since then (Chart 17).
I would not want to overplay the impact of this change – the share of nominal consumption by Canadians abroad is only about 4 per cent and the recent depreciation of the Canadian dollar will work in the other direction. Nonetheless, increased cross-border shopping may have been a reinforcing factor. Finally, online shopping has opened a new front on the competitive landscape.