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How the U.S. government shutdown could impact Canadians

Trade experts says some small businesses can’t survive a prolonged shutdown. And expect travel delays.

by Anne Gaviola
Jan 8 2019, 6:38pm

The U.S. government shutdown that has sidelined or forced hundreds of thousands of federal employees to keep working, without getting a paycheck for nearly three weeks, is all because of a fierce debate about a border wall. And the reverberations of that political fight are already being felt in Canada.

The U.S. Congress is at an impasse over whether or not to fund the $5.7 billion USD wall along the Mexican border that is meant to keep people from crossing into America illegally. President Donald Trump is expected to make the case for “the wall” during tonight’s prime time address, and potentially declare a national emergency to get it built.

This is at the heart of what is now the third-longest-running U.S. government shutdown in history. Trump says he’s prepared to continue a partial government shutdown for “months, or even years,” which spells trouble for Canada, whose economy is closely intertwined with its biggest trading partner.

Trade expert Cyndee Todgham Cherniak tells VICE News that all the ingredients are there for an exceptionally long standoff. And among those caught in the crossfire in Canada are companies that do business with the U.S., young entrepreneurs especially, and anyone seeking to travel south of the border. We break down who is most likely to be affected and why.

Tourists among first affected

It’s been 17 days since the shutdown began, and most Canadians probably haven’t noticed a huge impact on their day-to-day lives. But if this continues, it’s coming. The first to feel the effects of the shutdown are likely to be businesses that export to and import from America, like grocery stores and restaurants, as well as people traveling to and within the U.S. Over the weekend, the Transit Security Administration announced a “sick out,” where TSA agents (who are required to work without paychecks), called in sick to four major airports and impacted air travel.

Todgham Cherniak, who is the founder of LexSage, an international trade law firm based in Toronto, says you should prepare for lengthy delays at the airport for a number of reasons. American Customs and Border Protection officers, who handle travelers going into the U.S., won’t be fully staffed. Those who do show up will likely be doing the bare minimum and creating bottlenecks and delays as a work-to-rule tactic, by using air passengers as a pawn, to get attention and put pressure on politicians to end the shutdown. “Canadians will be complaining: ‘I got to the airport three hours before my flight and I was still in lineups to get through customs when my flight was taking off.’”

The pre-clearance areas in international airports will be hardest-hit, she says, based on what happened during previous shutdowns. Tourists and business travelers who are subjected to secondary inspections of their electronic device, and who don’t give up their password information, could face lengthy delays not just during the secondary check, but also in getting their device back afterwards.

Travelers who do manage to make it onto their flight will be faced with national park closures in the U.S., staffing shortages and a shutdown of federally-operated museums and tourist attractions alike, although the impact varies.

If you’re waiting on any paperwork from federal agencies that are affected, get ready to wait a long time, unless your case is urgent. This applies to people applying for or renewing their NEXUS pass, immigration visas, and federal rulings. Paperwork for shipping goods to and out of the U.S. will be backlogged. One exception to this is tax returns, which impacts American citizens in Canada, who are still required to file U.S. taxes. A White House spokesperson said this week that the IRS will issue tax refunds if the shutdown continues into the filing season.

The food factor

Any hiccups, slowdowns or disruptions at Canada-U.S. crossings—which are staffed by customs and border agents working without pay— will take a bite out of food imports.

You may soon notice the impact at your local grocery store, and favourite restaurant. According to Todgham Cherniak, consumers could see a decrease in the amount of chicken available. That’s because we import more chicken from the U.S. than from any other country, by a longshot. In 2017, more than 125 million kilograms of poultry came into the Canadian market from America. Chicken, like poultry and dairy, are subject to Canada’s supply management rules, which requires checks by federal workers in the U.S. to ensure these products meet specific standards and don’t go over certain quotas before they’re allowed into the country.

That would be down the road though. In an email to VICE, Juanita Dickson, who is president of Gusto 54, states that the handful of Toronto-area eateries it operates haven’t been impacted to date. One of their restaurants, Chubby’s Jamaican Kitchen, features jerk chicken as its signature dish. Dickson writes that “most of our proteins are sourced locally, with the exception of a few seafood items we bring in from Europe.”

Loblaw and Metro, two of the nation’s largest grocery chains, directed questions about any potential impact to the Retail Council of Canada, which said its members haven’t yet raised any concerns. Karl Littler, senior vice president of public affairs said VICE News’ inquiry is the first they’ve fielded on this issue from Canadian media.

Littler says that when it comes to chicken, there are many home-grown options that can “absorb the shock” from disruptions to supplies from the U.S. He says poultry, especially turkey, was closely monitored leading up to and during the holiday season but he has, thus far, not seen reports of any shortages. Littler says produce that can’t be grown in Canada on the other hand, could be impacted by the partial shutdown — especially fruits or other products that come from Mexico, and aren’t grown in Canada, like avocados. “We do buy quite a bit of grocery produce from the Mexican side, which also has to get through the southern border, so it has to get through two hurdles,” he says. A recent avocado growers strike could also put the squeeze on the staple.

Lengthy shutdown could kill companies

According to trade expert Todgham Cherniak, it’s young Canadian entrepreneurs who sell goods from Canada to the U.S., that face the harshest impact. She says a prolonged shutdown of more than a couple of months could actually shut down their operations. “Younger people, just starting out with their own business don’t typically have a lot of capital. They can’t go out and get a big bank loan to keep their company operating,” she explains. “You may have to lay off some of your staff because you can’t get your goods across the border. You can’t get your paperwork processed, you can’t get what you need, you can’t produce.”

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