With travel restrictions barely easing, U.S.-Canada border towns stuck in economic limbo

BLAINE — At Border Mailbox and Parcel, just minutes from the U.S.-Canada border, owner Doug Hornsby all but trips over the economic fallout of the pandemic every time he comes to work.

Before COVID-19, Hornsby’s customers were primarily Canadians who used his Blaine address for their online purchases to take advantage of cheaper U.S. shipping.

But that bit of globalization ground to a halt in March 2020, when the pandemic shut the border to nonessential travelers — and turned Hornsby’s shop into a kind of package purgatory, with thousands of unretrieved purchases.

“I have stuff that’s been here 16 months,” the 71-year-old grouses as he steps around a 65-inch flat screen TV that showed up last spring and hasn’t moved since.

Nor is it clear when it will move. Canada recently announced it will start easing some border restrictions, on July 5. But other restrictions have been extended through July 21 and a full reopening won’t happen until 75% of Canadians are fully vaccinated, which is likely many months away.

Those delays mean more economic pain and uncertainty for Blaine’s 10 or so mailbox service firms, along with the many other Canadian-dependent businesses in this charming community of some 5,000 residents.

“We’re just losing money every month,” says Hornsby, who says he netted less than $800 in 2020. “It’s frustrating.”

Hornsby could be speaking for hundreds of Washington state businesses that used to profit on Canada’s appetite for American goods and services, but have been in limbo for more than a year.

In Seattle, where Canadians accounted for one of every 10 pre-pandemic visitors, border restrictions pose yet another roadblock to recovery of the city’s downtown and its tourism, performing arts and professional sports sectors.

But the pain may be most acute in communities closer to the border.

Before COVID, towns such as Blaine, Lynden, Sumas and Bellingham in Whatcom County, and Port Angeles in Clallam County, enjoyed a symbiotic relationship with the roughly 3 million consumers in greater Vancouver, Victoria and other Southern British Columbia communities.

Many products are considerably cheaper in the U.S. than in Canada, thanks in part to differences in the countries’ tax regimes and business practices. Gasoline, for example, can be around $1.25 less per gallon than in Canada, while milk can be around $2 less for a gallon, depending on the exchange rate, merchants say.

Incoming Canadians can also find retailers, such as Trader Joe’s, that aren’t in Canada, and a larger variety of products, says Laurie Trautman, director of the Border Policy Research Institute, or BPRI, at Western Washington University.

Another big draw: Whereas fast-growing southern British Columbia is often heavily congested, “when you drive to Whatcom County, you’re not dealing with traffic,” Trautman says.

Those attractions turned much of northern Washington into a Canadian shopping zone.

[Pressure builds on Canada to lift coronavirus restrictions on U.S. border]

At the Bellingham Trader Joe’s, 27% of the cars in the parking lot were from Canada, as were 39% at the local Costco and 45% at the local Ross Dress for Less, according to a BPRI license plate survey from September 2019.

And for smaller merchants in border towns, Canadians can account for an even larger share of business.

Before the pandemic, much of the gasoline and diesel sold in Blaine went to Canadians, merchants say. At the Chevron on Peace Portal Drive in Blaine, owners Michael and Skye Hill reckon that 90% of the 3,500 gallons of fuel they sold daily went into Canadian gas tanks.

Canadians also bought a lot of American milk. Before COVID, Lynden-based Edaleen Dairy, which has retail outlets in Blaine, Lynden and Sumas, made roughly 70% of its retail milk sales to Canadian visitors, says sales manager David Dodson. The Blaine Exxon alone sold more than 200 gallons of milk a day from its convenience store, mainly to Canadians, with individual buyers grabbing “five, 10, 20 gallons, even more, sometimes,” says manager Virendra Singh.

All told, in 2018, Canadians accounted for around $140 million of the pre-COVID retail business in Whatcom County, or 11.5% of the county’s taxable retail sales, according to a BPRI analysis.

But most of those Canadian dollars have vanished since the imposition of border restrictions, Trautman says.

And while those losses can be more readily absorbed by national chains such as Costco and Trader Joe’s, many smaller businesses have struggled. As total border crossings, north and south, have plummeted more than 90% since travel was restricted, many border-town merchants have closed or cut hours and staff.

The Blaine Exxon temporarily shuttered its convenience store, and is selling only “several hundred gallons” of fuel a day, down from around 8,500, Singh says.

Edaleen Dairy saw retail sales drop by up to 80%, “like a light switch,” following travel restrictions, and is “still running on a winter crew,” says Dodson.

[Previous coverage: Alaska towns near the Canadian border prepare for another summer of restrictions]

Sales also cratered at Blaine’s Kaisacole Seafood, in large part because there were no Canadian vacationers stopping in for fresh seafood on the way to their American condos and timeshares. “We lost about 50% of the clientele,” says manager Tai Gong.

Canadian purchases of border-area real estate fell off dramatically, some brokers report, and Canadians who already own U.S. property “literally can’t come here to even mow their lawns,” says Bill Brown, a Windermere real estate broker in the nearby vacation community of Birch Bay, where Brown estimates that Canadians own 25% of the homes.

“We rely on those Canadian customers, big time,” adds Carroll Solomon, a director on the Blaine Chamber of Commerce board. “Local businesses have been hanging on by their fingernails.”

And it’s not just businesses. The city of Blaine expects 2021 revenue from sales, fuel and lodging taxes to fall by more than $600,000 compared with 2019, thanks to travel restrictions. That’s taken a 9% bite out of the city’s operating budget and “forced us to roll back our spending on services to levels similar to 2017,” says City Manager Michael Jones.

Still, many of those border communities have found ways to cope with the restrictions.

As the streets of Blaine and other border towns have largely emptied of Canadian tourists, some restaurants and shops have used that quietness to appeal to local customers. “When there were so many Canadians here, I think a lot of the locals might have gone to Bellingham because it was so packed down here,” says Blaine resident June Auld.

At their Blaine Chevron, Michael and Skye Hill were able to make up for much of the lost fuel sales by expanding their convenience store inventory with T-shirts, fresh flowers, groceries for local boaters and other items meant to “bring a different market of people in,” says Skye.

Other border towns have shifted their marketing efforts even further afield. After the Black Ball Ferry canceled its runs between Port Angeles and Victoria in March 2020, restaurants and other local businesses saw a steep decline in ferry-related business, which ordinarily brings in nearly half a million visitors and $64 million in spending annually to the local economy, according to a study commissioned by Black Ball.

Yet even as the Canadians disappeared, Port Angeles saw a surge in Seattle-area visitors who were “getting cabin fever” in the pandemic, says Marc Abshire, executive director of the Port Angeles Chamber of Commerce. So far, those feverish Seattleites have helped Clallam County avoid the steep hotel vacancy rates that have hammered downtown Seattle, Abshire says.

Border restrictions are spurring other forms of tourism.

Because Peace Arch Historical State Park in Blaine is reportedly the only U.S.-Canadian border crossing where Americans and Canadians can mingle freely, the park has become a reunion venue for people separated by COVID, says park ranger Rick Blank. (Canadians returning home from the park can skip the current requirement for a 14-day quarantine if they have proper documentation, Blank says.)

On any given day, the grassy 20-acre park hosts family gatherings, birthdays and weddings. One section has even been converted into a conjugal zone for couples, who are allowed to set up tents for the day.

But such adaptations won’t replace the Canadian dollars that used to flow through these border towns — and merchants have little idea when those dollars will return.

Instead, many border-town merchants have spent the last 15 months on a roller coaster of rumored re-openings followed by repeated extensions of restrictions.

Even last week’s announcement about restrictions easing did little to clarify matters or assuage concerns. Starting July 5, fully vaccinated Canadians will be allowed to skip the 14-day quarantine after returning from the U.S., but only if they’re asymptomatic, provide proof of a recent negative COVID test taken in the U.S. and submit a contingency plan for a 14-day quarantine in Canada.

Those requirements may be tolerable for Canadians going on an extended vacation in the U.S., but “for the day shopper, that’s still likely to be too much,” says Edaleen Dairy’s Dodson.

For that reason, many merchants aren’t expecting a significant change until the fall. “I’m preparing myself not to be that busy again this summer,” says Laura Massaro, whose Border Town Pizza in Blaine has survived entirely on deliveries and takeout during the pandemic. A few weeks ago, Massaro tested the waters by opening for lunch three days a week, “and so far we’re getting nothing.”

And hanging over the restrictions debate is a deeper worry: that after more than a year of border restrictions, Canadians may be so reconciled to shopping at home they no longer want to shop in America.

Even with a stronger Canadian dollar likely to boost their spending power in the United States, says Trautman, “is the average Canadian family — now they’re used to going shopping somewhere else — are they going to resume that cross-border travel right away?”

Trautman thinks that reluctance could be assuaged if U.S. and Canadian officials used the border reopening to streamline a crossing process that was often arduous even before COVID. But she’s not optimistic, given the snail’s pace of the current reopening. “Baby steps,” she says of last week’s announcement of border restrictions easing.

Back at his stuffed mail-services shop, Hornsby is only marginally more hopeful. “I mean, it’s a start,” he says of the recent easing. “But it’s not much of a start.”