Cross Border Pro

Tariffs drive imports into U.S. storage

A recent article in Business in Vancouver discussed the benefits of Canadian companies importing their U.S. bound products directly to the U.S. rather than first to their Canadian facility and then into the U.S. market. According to the article, Canada usually charges an 8% tariff on goods imported from China, while the U.S. does not charge tariffs on goods from China. So if a Canadian company is selling goods from China into the U.S. market they can avoid this additional cost by importing directly into the States.  They accomplish this by warehousing their goods just across the border in the U.S. One company set up specifically for this purpose is International Market Access run by Jim Pettinger.  From his 20,000sqft warehouse in Bellingham, Washington Mr. Pettinger services 130 companies based in British Columbia, Canada. International Market Access provides a knowledgeable service to Canadian companies looking to do business in the U.S.

Other options include leasing a small storage/warehouse space or for larger operations building or leasing a warehouse facility staffed with their own employees.  There are various pick-and-pack providers near the border that can also service the needs of Canadian companies.

Will Subprime Mortgage Fallout in U.S. Affect Canada?

The U.S. is currently experiencing significant fallout from years of subprime mortgage lending practices.  For years 100% loans have been readily available in the States.  This eventually evolved into so called "stated income" loans where little to no documentation of actual income was required.  And also variable rate loans where the first several years where at very low payments with payments adjusting in the second or third year.  Often the monthly payments in the first years of these loans did not even cover the interest so the loans were "negative" amortization.  You would actually owe more on the loan after a couple of years. 

This market seems to be collapsing on itself.  Several subprime lenders have declared bankruptcy with others going public about their troubled financials.  Canada has typically has a much more conservative approach to lending.  When we moved to Canada in 2004 I remember the lender discussing "high ratio" loans as those being less than a 25% down payment.  It has only been in the last year that I have starting hearing 100% loans advertised in Canada and even then not very heavily advertised.  I believe this historically conservative lending will be one factor to help the Canadian market maintain its currently active real estate market.

That being said, Canadians seem to watch very closely what is happening in the States.  Like it or not there is very much a physiological factor to the real estate market.  With Canadians hearing so much about the slow downs in the U.S. real estate market it seems to be affecting buying decisions in Canada.  Prices have been increasing in many Canadian markets at 20%+ per year for several years.  I believe some Canadian home buyers are spooked about how high prices have gotten and are looking at what is currently happening in the U.S. real estate market and this is affecting their buying decision.