Trade Wars Expected to Cause Decline in US Tourism

The Trump Administration’s escalating global trade war poses significant “high-risk consequences” for the U.S. travel industry, including potentially causing sharp declines in travel demand, according to a new report.

Published by Tourism Economics, an Oxford Economics company, the report says there is a “risk to the US travel sector should trade disputes and other policy changes intensify.” The analysis adds that an expanded trade war under the new presidential administration could “result in sharper declines in travel demand and economic output than previously projected.”

“Our findings warn of high-risk consequences for the US travel sector, with broad economic implications beyond tourism,” says the report. "Industry collaboration will be essential in mitigating negative impacts.”

The report outlines three key ways that Trump’s intensifying trade war could negatively impact US travel. They include:

The same report issues updated economic and travel industry projections for 2025 resulting from the president’s expanded trade war. GDP growth in 2025 is now expected to slow to 1.5 percent, which is down from 2.4 percent in a baseline scenario.

Looking specifically at the travel industry, the impacts of the trade war are likely to be “significant” says the report. Project impacts include:

Historical data underscores the fact that trade and geopolitical tensions influence travel demand, says the report summary.

For instance, during the previous US-China trade dispute, the US share of China’s long-haul outbound travel market shrank considerably. Similarly, during past periods of strained US-Mexico relations, visitor numbers from Mexico declined by 3 percent, according to the report.

“The current analysis emphasizes the vulnerabilities faced by US trading partners,” says the report.

Those vulnerabilities include the fact that Canada’s GDP is projected to decline 2.1 percent with unemployment in the country potentially surpassing 8.5 percent in 2025. These types of economic pressures would inevitably weaken outbound travel from Canada and thus impact  the US travel economy, the report explains.

“As global trade policies remain in flux, industry stakeholders must recognize the critical link between economic policy and travel demand,” adds the report.