The Border May Be Closed, But Business is Booming
May 7, 2021
When the United States-Canadian border was closed to all non-essential business on March 21, 2020, few people imagined a scenario where the closure would last longer than a few months. In the early days of the pandemic, the focus was on "fifteen days to flatten the curve." Given the vital economic importance of cross-border tourism, many believed the border would reopen by the summer of 2020.
Thirteen months later, the border remains closed to all non-essential travel with no clear end in sight. Last month, Canadian Prime Minister Justin Truedeau refused to commit to a time frame to reopen the border in 2021.
The important point to note is that the border closing is focused on non-essential travel. Here in Buffalo, commercial trucks continue to cross the Peace Bridge in both directions. Those with cross-border business interests can apply for a work permit. I myself have one that allows me to cross the border and travel to our law office in Burlington, Ontario. The reality is, although it has absolutely slowed from its pre-pandemic numbers, cross-border business continues.
The Milwaukee Business Journal reported that pre-pandemic, there were roughly 400,000 border crossings daily. Today, that number has dropped to 8,000. The good news is, as they reported, "business crossings have remained relatively the same. Despite the (overall) drop, essential travel continues to flow."
Roughly $2 billion in traded is conducted daily between the United States and Canada. To put that in perspective, in the last year (during the pandemic) Canada purchased more goods from the United States than they did from China, the U.K. and Japan combined.
One area to consider is commercial real estate transactions. A recent report found that despite being down 71 percent in the third quarter of 2020, foreign acquisitions in commercial real estate in the United States still reached $3.5 billion.
While that includes investment from places like China and Germany, even in the midst of the pandemic and the border closing, according to data compiled by Real Capital Analytics shows that Canada remains the top foreign investor in U.S. commercial real estate, accounting for 54.2 percent of all transactions. We work closely with many Canadian clients on the purchase, leasing and sale of U.S. properties, and that work has continued during the COVID-19 pandemic.
The takeaway for now is this: we advise our clients to not panic. Much of the media reports about the crushing impact of the border closure are talking about the impact on small business/ tourism in towns and cities near the border. While those issues are real, and are having a major impact, that doesn't mean commercial business is dead, in fact, far from it.
There are deals to be made for Canadian businesses and entrepreneurs looking to expand into the United States, and we are here to help. Call me anytime, 716-854-4300 ext. 216 or email me at [email protected]
