Earlier this month, Finance Minister Jim Flaherty convened with senators in Ottawa to discuss lowering import tariffs in an effort to combat a persistently “irritating” American-Canadian price gap. Despite the two currencies residing at near-parity, there is a price gap between Canadian and American retailers, compounded by an even larger discrepancy between sales tax rates. As a result, Canadians flock across the border in droves every bank holiday, and even on the casual weekend to reap the bountiful harvests of American consumer products. With import tariffs as high as 18 per cent, Canadian retailers—as well as consumers—feel ripped off by impediments to selling and buying products with stark competition just across the border, and many feel the federal government should do something about it.
This great southern migration is a phenomenon with which I am quite familiar. Torontonians at McGill may be well aware of my particular case study: the Walden Galleria Mall.
A haven for thrifty Ontarians, the Walden Galleria includes over 200 stores, 11 sit-down restaurants, a movie theatre, and is located just outside of Buffalo, New York—my hometown. While local mall-goers, myself included, enjoy complaining about the widely foreign-dominated parking lot, how “the Canadians” steal our post-Christmas deals on “Boxing Day,” and how they must have taken all the remaining size fours from the Urban Outfitters sale rack, the truth is, we love you guys. Honestly, we couldn’t live without you. Aside from the poorly groomed waste of a tourist destination which is the American side of the Niagara Falls, the Walden Galleria is just about all that western New York has going for it right now. With a slumping job market, continued population decreases, and as one of the most impoverished American cities, Buffalo is (almost) economically nothing without its loyal, Canadian fan base.
But Canada isn’t simply here to help out economically depleted, former rust belt American cities. Business has no sympathy: there are winners, and there are losers. And right now, Canadian businesses’ heels are digging into the mud, and the rope’s bristles are slowly gnawing at their feeble, clenched hands. But does the exchange rate mess have to be a tug-of-war?
As an American international student in Canada, I can’t quite devise a solution to promote Canadian business without keeping my home country in mind. So perhaps, from a third-party, politically unmotivated, expatriate perspective, there is, rather, a North American system of respect and compatibility to be celebrated. While the U.S. thrives on consumerism, Canadians benefit from federal social welfare, such as healthcare—in place of really cheap clothes. In America, you get clothes, and then you die. In Canada, you get clothes from America, and then you don’t die.
According to Numbeo, an online cost-of-living database, consumer prices in the U.S. are 18.31 per cent lower than in Canada. While the Canadian federal government could certainly lower certain tariff burdens, making domestic products lower for consumers, and businesses more competitive with their American counterparts, it seems unlikely that Canadian retail prices will be able to rival those of the United States any time soon. The Canadian and American economic systems are fundamentally different; the partial compensation of a tariff won’t affect any great reversals. Ideologies will persist until they come to an improbable halt; so please, Canadians, continue to cut me off in the parking lot, and take the next spot closest to the entrance.
