The U.S. tourism industry is bracing for a potential revenue collapse of up to $90 billion this year as international travel declines significantly, particularly from Canada. Targeted trade restrictions—specifically, the former President Donald Trump’s trade war with China—are at least partially responsible for the current state of international travel. This climate of suspicion towards foreign countries is making millions of students and visitors reconsider their travel plans to the US.
According to data from U.S. Customs and Border Protection February 2023 saw a staggering 12.5% decrease in travelers entering through the northern border. That’s an 8.7% decrease from the same month last year. It only got worse in March, with incoming travel from Canada down an additional 18%. This decline is especially concerning since Canada has always been a red, white and blue dependable tourist provider for the U.S.
Trump’s trade war has certainly done its part to discourage Canadian travelers from coming south. These policies incurred the wrath of Canadian interests by advocating for heavy tariffs and even hinting that Canada could be the U.S.’s “51st state.” This ongoing perception gives rise to a chilling effect on travel from Canada, which has manifested itself in discouraging potential trips.
Travelers from other historically important countries, like the UK and Germany, have taken a clear stand. Or they have recently decided to cancel trips to the U.S. According to reports, travel from these countries plummeted by up to 29% in March. Analysts argue that the killer cocktail of trade restrictions and a general feeling of hostility toward foreign countries has only exacerbated this trend.
Despite the alarming statistics, the U.S. has exempted most imports from Canada, including those from Mexico, from the 25% duties imposed under Trump’s trade policies. Yet European imports are still hitting the 10% duty wall, making it even more difficult for international travelers.
The influence of these policies goes far beyond just immediate travel numbers. It would be a huge boost to U.S. economic productivity. One major Wall Street firm has estimated an eye-popping $90 billion loss in revenue this year alone. This decrease may be due to less travel combined with boycotts of U.S. products.
In a report published last month, Goldman Sachs analysts warned that even modest declines in activity have meaningful downstream effects on overall U.S. GDP growth. They noted that this paltry little headwind provides yet another impetus for the sort of underperformance we’re likely to see. In addition to the negative impact of tariffs and the drag on US exports from foreign retaliation, these pessimistic factors are already baked into our most recent US GDP forecast for 2025.
“The damage has been done,” remarked an anonymous source familiar with the situation, highlighting the long-term effects of current policies on international relations and tourism.
Despite all of these hurdles, other leaders in the industry are still cautiously hopeful. David Whitaker, president and CEO of the Greater Miami Convention & Visitors Bureau, stated, “Ask me again in May,” suggesting that there may still be hope for recovery as travel patterns evolve.