The unfriendly border

TRAVEL across the border between Canada and the United States long followed a predictable pattern. When the Canadian dollar went up, shoppers would flood south and a few budget-conscious American tourists would forgo their vacation among the moose, mountains and Mounties. There was even a rough rule of thumb: for every 10% appreciation of the loonie (as Canadians call their currency) against the greenback, there would be a 13% increase in the number of Canadians going south and a 3% decrease in the number of Americans heading north.

Recently this pattern has broken down. In the past two years, as the loonie soared from 72 cents to its current level of 83 cents to the American dollar, the number of cross-border shoppers has barely budged (see chart). Meanwhile, the number of Americans heading north has dropped 22% since 1999—a far bigger decrease than the rule of thumb would indicate.