The current tariff situation has been tough on many Canadian businesses — but what about communities on the U.S. border?
In March, the Rainy River Future Development Corporation (RRFDC) reached out to businesses in the district with a survey to determine how border communities’ importing and exporting practices are changing in response to U.S. tariffs.
While about one-third of the surveyed businesses exporting to the U.S. on a regular basis have halted or slowed down exports due to increased difficulty at the border, the survey found the largest problem area was importing.
“The large majority of businesses and industries in the area are importing for resale on a weekly or monthly basis,” RRFDC executive director Angela Halvorsen Smith told Northern Ontario Business.
“Prices of products have increased significantly, making them too costly for local customers. Some businesses have said they don’t want to buy U.S. products, and are looking for other markets. Some have said they’ve discontinued imports from the U.S.”
Halvorsen Smith said the 14 survey responses provided a good cross-section of the needs of businesses in the district. The respondents included a wide range of businesses in the areas of woodworking, wood manufacturing, agriculture, tourist resorts, construction supply, and retail outlets.
Imported products included everything from clothing to fishing tackle, diagnostic equipment, dog food, and materials for wood manufacturing.
Exporting was less affected. According to the RRFDC’s Annual Report, district forestry companies such as Manitou Forest Products and Nickel Lake Lumber are experiencing increased tariffs on U.S. exports, but continue to take advantage of stable timber prices due to increased demand for housing supply in the U.S.
In addition to focusing on how businesses are responding to changes in the supply chain and new regulations, the survey also sought to determine which businesses require assistance, which are facing major changes like layoffs, and the effects this will have on the local market.
Halvorsen Smith was surprised to discover that about 35 per cent of respondents are facing the tough reality of laying off workers. About half of the respondents are seeking additional resources to help them, such as reaching out to MPs and MPPs and speaking out for small businesses.
Cross-border trade is vital to the region’s economy because local companies have easy access to both Canadian markets and U.S. markets in the Upper Midwest.
“Our district has around 24,000 people, and you double that when you add the American side,” said Halvorsen Smith.
“The reciprocal movement across the border really helps small businesses. And it gives us Canadians more services. …It’s all one large community.”
Fort Frances, the hub of the district, is home to the Fort Frances-International Falls International Bridge, the busiest border crossing between Ontario and Minnesota, which is only two kilometres away. The bridge is used for shipping by local businesses, for shopping trips by local residents, and by vacationers.
Other border crossings in the region include the Rainy River-Baudette crossing, which is 92 kilometres away from Minnesota and the most westerly crossing between Minnesota and Ontario.
Another issue revealed by the survey, said Halvorsen Smith, is the confusion caused by the constant flux of the trade relationship resulting from rapid changes to policy.
“The hardest part for a lot of people is that it changes so frequently that they don’t know what to do. They’re just trying to keep up with the paperwork.”
The RRFDC is reaching out to survey respondents who requested assistance. The membership-driven, non-profit community corporation improves the commercial and industrial base of the district by helping with marketing opportunities, grant facilitation, partnership referrals, municipal introduction, and occasional direct investment through loans.
RRFDC is supported by FedNor and Industry Canada under the Community Futures Program. FedNor and Community Futures Ontario are putting together tariff resources to help businesses transition or expand to new markets.
RRFDC also provides business counselling and information services.
“We have a business advisor in the office who’s trained to keep on top of the tariffs, customs, the news, what’s happening and when it’s taking effect,” said Halvorsen Smith.
Halvorsen Smith said the district is bracing itself for the impact tensions between the U.S. and Canada might have on the upcoming tourist season.
Tourist resorts and other venues in the district traditionally rely on vacationers from the U.S. who cross the border for hunting and fishing. The fishing opener, which launches the summer tourist season, is still a month away.
“People here are changing their vacation plans now,” said Halvorsen Smith. “But we haven’t seen what effect this will have on tourism coming north.
“We love our American tourists, and our towns are quite busy in the summers. I hate to see that go, and I hope it doesn’t.”
In recent years, area tourist resorts have suffered a number of challenges, including restrictions during the pandemic followed by a year of major flooding, Halvorsen Smith said.
In addition to being a strain on local businesses, increased tariffs and less permeability at the border have also been a strain on local residents and international relationships of all kinds.
“These are our sister cities, and we work well together,” said Halvorsen Smith. “We’ve always supported local businesses, even if they may not be Canadian markets, because they’re our friends and families over there. We don’t think of it as a whole other country; we think of them as our friends across the falls.”
