U.S. small businesses face economic fallout of closures at borders
Localities near Mexico, Canada try to hold on until travel opens again
NOGALES, Ariz. — Evan Kory started calling brides in northern Sonora state in Mexico in March 2020, asking if they wanted to get their wedding gowns from his Arizona store just before the U.S. closed its borders with Mexico and Canada because of the coronavirus.
His namesake shop in the border town of Nogales was popular among brides-to-be in northern Sonora for its large, affordable inventory, said Kory, the third-generation proprietor.
Just steps from the border fence, Kory’s has been in business for half a century but has been closed for a year because of the pandemic, with its main customer base — Mexican daytrippers — largely unable to come to the U.S. and shop.
Some 1,600 miles north, Roxie Pelton in the border town of Oroville, Wash., has been in a similar pinch. Business at her shipping and receiving store is down 82% from a year ago because most of the Canadians who typically send their online orders to her shop haven’t been able to drive across the border.
Last summer, Pelton let two employees go and now works alone.
“I’ve gotten by this far, and I’m just praying that I can hold until the border opens up,” Pelton said.
In border towns across the U.S., small businesses are suffering from the economic fallout of the partial closure of North America’s international boundaries.
Restrictions on nonessential travel were put in place a year ago to curb the spread of the virus and have been extended almost every month since, with exceptions for trade, trucking and critical supply chains. Last month, the Department of Homeland Security announced that the borders with Mexico and Canada would remain closed until at least April 21.
Small businesses, residents and local chambers of commerce say the financial toll has been steep, as have the disruptions to life in communities where it’s common to shop, work and sleep in two different countries.
“Border communities are those that rely — economically, socially, and yes, health wise — on the daily and essential travel of tourist visa holders,” the presidents of 10 chambers of commerce in Arizona, Texas and California border cities wrote in a recent letter to DHS and the Transportation Department. It asked the government to allow visitors with U.S. tourist visas to cross into their states.
As more Americans are vaccinated against COVID-19 and infection rates fall, many hope the restrictions will soon be eased.
Sen. Susan Collins, R-Maine, asked the Biden administration to reconsider U.S.-Canadian border restrictions, arguing “common-sense exceptions” like family visits or daily commerce should be made for border towns where infection rates were low. But the rules remain in place.
Meanwhile, Rep. Raúl Grijalva, D-Ariz., has introduced a bill to provide small businesses within 25 miles of a U.S. border with loans of up to $500,000 or grants of $10,000.
“Cross-border traffic is the lifeblood of their economy,” Grijalva said. “And it’s the people that walk over, the people that come to do retail shopping.”
Visitors from Mexico contribute 60% to 70% of sales tax revenue in Arizona border communities, according to the Arizona-Mexico Commission, which promotes trade and tourism.
In Texas, border cities have faced higher unemployment during the pandemic than the state average, though in some places, that had already been the case.
Jesus Cañas, a business economist at the Federal Reserve Bank of Dallas, said Texas border economies appear to have fared better than many predicted a year ago.
In border cities like Brownsville, Laredo and El Paso, January’s non-seasonally adjusted unemployment rates of 9.5%, 8.9% and 7.4%, respectively, were close enough to the state’s rate of 7.3% to suggest the restrictions
have had less impact on larger, more diversified border economies than elsewhere.
“What I have seen over the years is that the border adjusts to these shocks in a very peculiar way,” Cañas said.
In Nogales, the economic wear from nearly 12 months of a partially shut border is easy to spot in the historic downtown.
Bargain clothing stores, money exchanges, second-hand shops and retailers selling plastic knickknacks within walking distance of the border were closed. Many storefronts were boarded up.
Olivia Ainza-Kramer, president
of the Nogales Chamber of Commerce, said the loss in revenue from the drop in Mexican shoppers over the past year has been felt most acutely by businesses closest to the border that tend to be family owned and cater to shoppers on foot.
Further north, big-box retailers and other stores have fared a little better because they’re visited by residents of the town of 20,000, she said.
Kory, who owns the bridal shop, saw the contrast up close. His family has three clothing stores in Nogales. Two are steps from the U.S.-Mexican port of entry — and both closed — while a third is about 4 miles from the border.
Kory said his family has managed to keep the third store open, albeit sales are down 75% to 80% from prepandemic levels. Most of the customers are Nogales locals, he said.
“We’ve seen the evolution at the international border, you know, from the ‘40s ... in my family,” he said. “This is the first time that we’ve had a closure.”
Kory said the business has kept just four of its usual 27 employees. But based on conversations with customers in Mexico, he’s confident that once restrictions are lifted, sales will be strong enough to rehire all those workers.
“That is the plan,” Kory said, “but we can’t do it until our customers are allowed to cross.”