Tighter Border Security and its Effect on Canadian Exports

The 9/11 terrorist attacks led to increased security at the Canada–U.S. border. This change has raised concerns about significant disruptions in international trade between the two countries, in the form of delays and increased compliance costs. Given the Canadian economy’s high degree of dependence on trade links with the United States, any reductions in flows between the two countries could threaten the economic welfare of Canadians.

This report uses statistical methods to assess the impact tighter border has had on Canada’s exports to the United States. Export flows are examined in a variety of ways, including aggregate exports, exports by port and exports by commodity. After accounting for economic growth in the United States and relative prices between the two countries, the study finds little evidence that tighter border security has reduced export volumes. Industry-specific factors, such as the tech bust, were more important in explaining reduced trade flows.

This report was produced by Signal49 Research’s International Trade and Investment Centre that examines the implications of global economic dynamics for Canadian business and governments leaders. More on the Centre’s research, events, and membership