The high-flying loonie is prompting south of the border shopping sprees, but it’s also forcing many local businesses to tighten their purse strings.

As of late last week the Canadian dollar was trading at more than $1.07 US, an increase of roughly 23 per cent since January.

The sudden rise means Canadians can stretch their dollars further in the United States, but it is playing havoc with local businesses that have American trading partners.

With roughly 70 per cent of Muskoka Transport’s freight crossing the border, controller Steve Rettie said they’re beginning to feel the pinch.

“The biggest hit is on our customers and their shipping levels. We’re seeing less freight moving to the United States,” said Rettie. “Their products are now overpriced in the U.S., and purchasers are buying within the U.S. because it’s cheaper.”

The strong dollar is also hurting Muskoka Transport in other ways.

“On the trucking side, we’ve had to keep our prices at a constant Canadian rate because we’re not seeing any decrease in our expenses,” said Rettie. “So when we quote prices in the United States we become less competitive against American carriers.”

If the dollar continues to rise, Canadian manufacturers may begin to sell more domestically and Muskoka Transport will have to adjust with them, said Rettie.

“A lot of our customers will probably take this as a short-term thing and roll with it. They may see declining profits for a few years or maybe shorter. Other Canadian manufacturers might be proactive and find Canadian customers,” he said. “We just have to react quickly to what our customers are doing.”

Jim Dwyer of Scott’s of Muskoka bookstore is employing the strategy, if you can’t beat them, join them.

Recently the business owner decided to sell his books at their U.S. prices.

Retail book sales is one of the few businesses where U.S. and Canadian prices are listed side-by-side, and the difference in costs has left many customers frustrated, said Dwyer.

“There’s been a lot of hype surrounding this for about six or seven months,” said Dwyer. “This was inevitable. It’s a case of either do it or sell no books.”

Dwyer said the tipping point for him came when he received a book a week and half ago that had been printed and distributed in Canada, but was listed at US$21.95 and $26.95 Canadian.

“That’s just bunk. There’s no way I could justify that to my customers,” he said.

With large chains like Wal-Mart and Indigo slashing the cost of their books, Dwyer said he’s been left in a no-win situation.

“Publishers tell us, ‘if you don’t like it, tough.’ It’s the little guy who gets hurt,” he said.

Down the street, Libby Brownlee, owner of Readers’ World, is offering a 20 per cent discount on all new titles, and 10 per cent off everything in the store. However, she said she has no plans to switch to U.S. prices anytime soon.

“It simply isn’t feasible if the store is going to remain here,” she said. “People sometimes come in and ask if they can pay the American price. I tell them I buy in Canadian dollars, so I sell in Canadian dollars.”

Brownlee said the publishing industry was caught off guard by the sudden spike in the value of the dollar, but it is working to remedy the situation.

“Publishers are bringing their prices down. I think by the new year prices will be more reflective,” she said. “Everyone thinks that the wheels turn a lot faster than they actually do, but if people are patient it will all work out.”

Nonetheless, not all business owners are lamenting the rising dollar.

Lena Kolobow, owner of Chancery Art Gallery, said the strong dollar has made it much cheaper for her to pay her artists, the majority of whom are American and request U.S. funds.

“I was buying things at $5,000 US and paying almost $6,000 Canadian,” she said.

Ken Passmore of Trade Northern Ontario said the changing dollar is a reality that local business owners need to get accustomed to.

“In the north, the major factor, specifically with manufacturing, is the transportation cost. With the lower dollar, there was some flexibility to cover those costs, but that’s gone now,” he said.

Passmore said there are changes businesses can make to remain viable.

“We need to focus on new markets, and specifically the domestic market. It’s an area that hasn’t been fully explored,” said Passmore. “They also need to look harder at their productivity. Things need to be fine-tuned somewhere to make up the difference.”