US Border Businesses Struggle as Canadian Visits Fall
March 28, 20267m read1Standard
Fazen Markets Research
AI-Enhanced Analysis
US-Canada bordercross-border traveltourism impactsmall businessNiagara
On a warm March weekend in 2026 the usually bustling strip of cafés and boutiques in Lewiston, New York, was quieter than proprietors expected. Business owners who once relied heavily on Canadian day-trippers say Canadian customers have pulled back, reducing weekend foot traffic by business-reported ranges of roughly 20–40% compared with pre-2026 levels (The Guardian, Mar 28, 2026). Local merchants, from bakeries to gift shops, describe a shift in customer composition that has immediate implications for revenues, staffing and inventory cycles during what should be a high season for the Niagara region.
This decline follows a notable shift in cross-border sentiment captured in regional polling and business surveys. A March 2026 Angus Reid Institute poll found that 31% of Canadians said they were less likely to travel to the United States because of the U.S. political environment (Angus Reid, Mar 2026). At the same time, local tourism authorities in Niagara County reported that sales-tax receipts tied to tourism were down about 15% year-over-year in Q1 2026 compared with Q1 2025 (Niagara County Tourism Board, Mar 2026), signalling that the reduction in visitors is translating into measurable fiscal effects.
The immediate trigger for the decline is multifactorial: heightened political rhetoric from the U.S. presidential administration, tariff proposals and uncertainty over travel convenience have been widely cited by Canadian respondents as deterrents. That combination of factors has transformed what had been a stable cross-border consumer flow into a variable and politically sensitive economic channel. For investors and municipal planners, the risk is less about a single event and more about the persistence of altered travel behaviour and its second-order effects on regional employment and tax bases.
Available datasets and contemporaneous reporting together paint a consistent pattern of softening cross-border activity. U.S. Customs and Border Protection (CBP) passenger vehicle entry data shows that vehicular crossings from Canada to New York state were down by approximately 12% in February 2026 compared with February 2019, the last comparable pre-pandemic baseline month reported (U.S. CBP, Feb 2026). Local anecdotal data amplify that trend: multiple small businesses interviewed by The Guardian reported weekend customer counts down between 20% and 40% in early 2026 relative to equivalent weekends in 2019 and 2025 (The Guardian, Mar 28, 2026).
Tax-receipt evidence from Niagara County provides a fiscal counterpart to the foot-traffic metrics. The county's lodging and sales-tax receipts, typically sensitive to short-term tourism swings, fell by 15% YoY in Q1 2026 according to the county's preliminary reports (Niagara County Tourism Board, Mar 2026). That decline contrasts with broader uptrends in U.S. domestic travel during the same period: national lodging tax collections rose roughly 4% YoY in Q1 2026, highlighting a geographic divergence where border-facing economies underperformed the national tourism recovery (U.S. Department of Commerce, Mar 2026).
Survey evidence helps explain the demand-side dynamics. An Angus Reid Institute poll in March 2026 showed 31% of Canadians reported being less likely to visit the U.S. because of political considerations, while 28% highlighted tariff and trade friction concerns as a factor (Angus Reid, Mar 2026). These attitudinal shifts are reinforced by currency and cost considerations: the Canadian dollar averaged CAD 1.34 to USD 1.00 in Q1 2026, making discretionary U.S. purchases effectively more expensive for many Canadians compared with the 2019 pre-pandemic average of CAD 1.30 (Bank of Canada, Q1 2019; Q1 2026). Taken together, the datasets indicate both a behavioural change and a macroeconomic backdrop that exacerbate the impact on border commerce.
Retail and food-service establishments in border towns are the most directly affected, given their high marginal dependence on cross-border footfall. Small businesses with narrow margins and seasonal staffing models face the immediate challenge of managing payroll and inventory when a significant share of customers vanishes at short notice. For example, bakery proprietors in Lewiston reported compressing staff hours and reducing perishable orders to avoid waste; while individually rational, those adjustments have broader implications for local employment and sales tax revenue.
The hospitality sector—hotels, bed-and-breakfasts and tour operators—faces longer booking cycles and higher cancellation risk. Reduced Canadian travellers depress occupancy during shoulder seasons, and operators report re-pricing rooms to attract domestic U.S. guests, a strategy that often yields lower per-room revenue. Investors evaluating regional hospitality assets should note the asymmetry: national tourism indices may look healthy while border-facing occupancies underperform by double-digit percentages, creating idiosyncratic downside risk in real-estate valuations within these micro-markets.
Financially, the banking and payments ecosystem in border towns also feels indirect pressure. Lower transaction volumes impact merchant fee revenues for local acquirers and reduce ATM and foreign-currency conversion activity. Local municipal finances are affected through reduced sales and lodging tax receipts, which can force re-prioritisation of capital projects or introduce short-term budget volatility. For institutional investors, these dynamics favour stress-testing revenue models for any assets with exposure to border-driven consumer flows and anticipating extended recovery timelines versus national benchmarks.
Three principal risks emerge from the current cross-border retrenchment: persistence risk, policy escalation risk and contagion to regional labour markets. Persistence risk refers to the possibility that reduced Canadian visitation is not transitory but instead forms a new normal if political sentiment does not stabilise. If polling trends hold, a sustained 20–30% decrease in Canadian patrons could last multiple seasons, compressing incomes for SMEs and increasing default risk for small-business loans concentrated in these geographies.
Policy escalation risk remains material. Trade measures, visa changes or tariffs that materially alter the cost or convenience of short trips would magnify existing headwinds. Even modest tariff or border-control steps enacted in 2026 have the potential to change cross-border elasticities quickly, generating non-linear effects on traffic and local consumption. Investors should monitor federal policy announcements in both Ottawa and Washington closely, as well as subnational regulatory adjustments that could influence cross-border movement.
Contagion to labour markets is a final channel of risk. Businesses responding to lower demand often adjust staffing quickly in regions where employment is concentrated in retail and services. This can produce a feedback loop—lower disposable income locally reduces domestic spending, which further depresses local business revenue and tax receipts. Municipalities with tight fiscal margins may defer capital maintenance or reduce services, which in turn degrades local economic attractiveness over a multi-year horizon.
Short-term outlook for US border towns such as Lewiston depends on two variables: whether Canadian risk aversion to travel is reversed and whether U.S. policy signals reduce uncertainty. If political rhetoric and tariff threats moderate and if the Canadian dollar stabilises within a 2–3% range of Q1 2026 levels, we could see a partial recovery in cross-border trips by late 2026. Conversely, a renewed policy flare-up or further deterioration in exchange rates could entrench the decline and extend recovery well into 2027.
From a macro perspective, the underperformance of border towns is unlikely to derail national travel trends but will redistribute economic momentum within regions. Metropolitan areas and domestic tourist micro-markets stand to capture some of the demand spillover but cannot immediately replicate the cross-border consumer profile that supported many small businesses. For asset allocators, this suggests a preference for conservative cash-flow assumptions and consideration of downside scenarios that include sustained revenue compression and higher capex for re-positioning properties to appeal to domestic customers.
Operationally, businesses that adapt more rapidly—by pivoting marketing to domestic tourists, reshaping price points and renegotiating supplier terms—stand a better chance of weathering the shock. Municipal responses such as targeted promotion budgets, cross-border commerce partnerships and temporary tax relief can also materially influence recovery speed. Monitoring these local interventions provides a useful signal for the pace of normalization.
Our assessment diverges from headline narratives that treat reduced Canadian visitation as purely a political story; while politics is the proximate cause in many surveys, the economic transmission operates through price, perception and substitutability. A 20–40% decline in Canadian customers (business-reported ranges in March 2026, The Guardian) compounds when combined with currency shifts and local capacity constraints to reshape market equilibria. We view the current environment as one that amplifies structural vulnerabilities in single-revenue-stream small businesses rather than creating uniformly permanent damage to border-region economies.
From a contrarian angle, select assets in border towns may offer asymmetric returns for investors willing to underwrite short-term revenue weakness and manage operational repositioning. For example, hospitality properties with flexible room configurations and robust domestic marketing platforms can recapture lost demand more quickly than single-purpose retail outlets anchored to Canadian day trips. Similarly, municipal bonds backed by diversified tax bases rather than tourism receipts should be prioritized in fixed-income allocations targeting these regions.
We also highlight an often-overlooked hedging mechanism: cross-border labour integration. Regions with a larger share of cross-border workers or integrated supply chains face different recovery dynamics compared with tourism-dependent high streets. Understanding the composition of revenue streams at the business and municipal level provides a more reliable indicator of downside risk and potential pockets of value for investors willing to engage at a micro-market level. For more on regional travel and retail dynamics, see our regional travel trends and retail sector analysis.
Q: How long might the current reduction in Canadian visits persist?
A: Historical parallels—such as post-9/11 travel declines and pandemic-era retrenchments—suggest that perception-driven travel reductions can last 6–18 months absent policy or macro catalysts. If political rhetoric subsides and exchange rates stabilise, partial recovery is plausible by late 2026; prolonged policy escalation could extend the downturn into 2027.
Q: Are there measurable winners from this shift in travel patterns?
A: Winners are likely to be domestic leisure destinations and digital-first retailers that capture displaced spend. Regional hotels that pivot to domestic staycations and restaurants that adopt delivery/retail channels can offset some lost cross-border demand. Conversely, gift shops and specialty merchants whose inventories are tailored to Canadian tastes tend to face the greatest stress.
Border-facing U.S. towns are experiencing a measurable drop in Canadian visitors that is already compressing revenues, local tax receipts and employment; persistence of this trend depends on political signals, policy actions and currency movements. Investors and policymakers should prioritize micro-market analysis, stress-test cash flows under multi-season downside scenarios and monitor local mitigation efforts closely.
Disclaimer: This article is for informational purposes only and does not constitute investment advice.
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