US Tourism Faces $90bn Hit as Allies Reduce Travel

US tourism industry is facing a $90bn loss as Western allies cut back on travel over Trump’s trade policies

The travel and tourism sector in the United States currently faces a significant downturn as mounting trade tensions under the President Donald Trump’s administration trigger global backlash, and potentially cutting revenues by as much as $90 billion.

The impact on the US economy is particularly coming from the nation’s key allied nations like Canada, the United Kingdom, and Germany. These countries, once major sources of inbound tourism, have responded to escalating tariffs and inflammatory rhetoric with reduced travel and widespread boycotts of American goods.

US Tourism Faces $90bn Hit as Allies Reduce Travel

Tourism from Canada has seen the biggest drop after Trump targeted the country directly through trade restrictions and indirectly by suggesting that the northern neighbour and close ally could become the “51st state.”

Traveler data from US Customs and Border Protection showed that visitors coming across the northern border were down 12.5 per cent in February year over year, and off 18 per cent for March, an NBC News report said.

Visitors from Western Europe, another traditional allied region, have also pulled back, according to the National Travel and Tourism Office, a division of the US Commerce Department.

Some vacationers from the most historically reliable countries of origin, like the United Kingdom and Germany, have chosen not to visit the US, as travel from those countries declined by as much as 29 per cent in March.

In total, Western European visitors saw a 12 per cent drop in March, one of the highest on record outside of the pandemic.

“Multiple data sources are pointing at a slowdown — and there are lots of anecdotes that point to an even more severe slowdown,” said Jan Freitag, senior vice president of lodging insights for STR Global and national director, hospitality analytics for CoStar Group.

Trump has hit Western allies most directly through tariffs on foreign vehicles and auto parts as well as on steel and aluminum. European imports currently face a 10 per cent duty, though for now Trump has paused a second round of tariffs on European Union (EU) nations.

He has also exempted most items from Canada and Mexico from 25 per cent duties on imports he had sought to impose on those two nations. Even with those measures, there’s been a worsening in sentiment against the US that is likely to have economic repercussions for its residents.

In a recent note to clients, analysts with Goldman Sachs said that under a worst-case scenario, the US stands to lose as much as $90 billion in revenue this year from the combined impact of reduced visits and canceled purchases of US goods.

“Foreign boycotts of US products will likely impose a modest drag on US Gross Domestic Product (GDP) growth in 2025, mostly driven by a pullback in foreign tourism,” the analysts said in a note.

“Although small, this headwind provides another reason—in addition to the more direct negative impacts of tariffs and drag on exports from foreign retaliation that are already built into our US GDP forecast—why US GDP growth will likely underperform consensus expectations in 2025,” Goldman Sachs added.

The negative feelings the Trump administration has engendered among longtime allies are unlikely to reverse quickly even if the president relaxes his posture, said Adam Sacks, president of Tourism Economics, a unit of Oxford Economics consultancy.

“The damage has been done,” he said. While the fallout can still be mitigated somewhat if Trump softens his stance, “it will take time for things to settle and for people to re-warm toward the US,” he said.

Sacks said travel groups are reporting significantly fewer bookings. However, representatives for some U.S. tourism hot spots, such as Miami and Niagara Falls, say they have yet to see major evidence that a slowdown is afoot.

President and Chief Executive of the Greater Miami Convention & Visitors Bureau, David Whitaker, said that the full weight of the administration’s moves have hit largely after the city’s peak tourism season in winter and early spring, and that hotel bookings and room rates have held up so far. Miami is also buffeted by its diversified international visitor base and the fact that those visitors tend to be more affluent.

But he said there is still likely to be some impact in the coming weeks and months. “Ask me again in May,” he said.