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Since June 1, 2009, Canadian citizens,over the age of 16, driving or sailing between Canada and the U.S. need a passport. When crossing the border by land or sea, they are expected to provide:
American citizens visiting Canada should refer to Inside Canada: Crossing the Border. Citizens of any other country generally require a passport to cross the U.S./Canada border, and may also require a visa as described in Inside United States: Crossing The Border.
The new requirement for passports when flying to the U.S. was known in advance, but in typical fashion, there was a huge last minute charge at the passport office of new applications for passports. In any case, if you wish to go onto any other territory, from the USA, say visiting Ballin Island on the 7 day around Hawaii cruise, you must have a passport to travel on the ship.
However, it is a good recommendation to have your Canadian Passport anyways. Using your Canadian Passport will get you through customs, going into the USA or back into Canada much faster. It is a trusted form of identification that makes travelling to the United States a much faster and smoother process.
If one is flying into the United States with a first stop or change of planes in Canada, like on Air Canada, one goes through customs procedures in Canada, recovers baggage, and then boards the connecting flight to the United States by domestic flight. This seemingly confusing procedure occurs, despite the international nature, to allow Canadian airlines to fly to U.S. airports that don't have customs facilities.
If flying from U.S. airports, flights to Canada or through Canada (again despite the international nature) are most often found within domestic terminals.