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US Economy to Lose Billions as Foreign Tourists Stay Away
Augusta Saraiva
Bloomberg
Updated Tue, April 15, 2025 at 11:37 AM CDT
4 min read

(Bloomberg) - The US economy is set to lose billions of dollars in 
revenue in 2025 from a pullback in foreign tourism and boycotts of 
American products, adding to a growing list of headwinds keeping 
recession risk elevated.

Arrivals of non-citizens to the US by plane dropped almost 10% in March 
from a year earlier, according to data published Monday by the 
International Trade Administration. Goldman Sachs Group Inc. estimates 
in a worst-case scenario, the hit this year from reduced travel and 
boycotts could total 0.3% of gross domestic product, which would amount 
to almost $90 billion.

Foreign tourism has been a tailwind for the US in recent years as the 
cessation of pandemic-era restrictions sparked a resurgence of 
international travel. But many potential visitors are now rethinking 
their vacation plans amid increased hostility at the border, rising 
geopolitical frictions and global economic uncertainty.

One of them is Curtis Allen, a Canadian videographer who canceled an 
upcoming US vacation after President Donald Trump imposed punitive 
tariffs on his home country and suggested it should become the 51st US 
state. Allen and his partner have been on multiple camping trips to 
Oregon over the years, but this year, they will be traveling around 
British Columbia instead.

"We're not just staying home," said Allen, 34. "We're going to go spend 
the same money somewhere else."

Allen's hesitance doesn't stop there. He canceled his Netflix 
subscription and is actively avoiding American imports at the grocery 
store.

"Now it takes us double the time, because we're looking at where the 
products came from," he said.

International travelers spent a record $254 billion in the US last 
year, according to ITA figures. Coming into 2025, the outlook was 
positive: The ITA projected in early March that the US would welcome 77 
million visitors this year, just shy of the 2019 record, before pushing 
to a new high in 2026.

But those estimates came out just before stories of harsh detentions at 
US airports, ensnaring travelers from countries like France and 
Germany, started making headlines. Major public institutions in Canada, 
including a pension management firm and a leading hospital, are now 
advising staff against traveling to the US.

Almost $20 billion in retail spending from international tourists in 
the US may be at risk, according to a Bloomberg Intelligence analysis.

Early signs of a sharp pullback are already showing up. Airfares, hotel 
rates and car rental costs fell in March, according to a monthly Bureau 
of Labor Statistics report on consumer prices published April 10. 
Economists at Goldman Sachs and HSBC Holdings Plc said lower demand, 
including from foreign travelers, probably played a role.

Omair Sharif, president of Inflation Insights, noted the decline in 
hotel rates was driven by an almost 11% drop in the Northeast in 
particular, possibly a result of fewer Canadians traveling there.

"Given what we know about how much Canadian travel has fallen off, 
that's potentially a bit worrying for that region," Sharif said.

Summer Season

The timing is "very interesting" for Rainbow Air Helicopter Tours in 
Niagara Falls -- which just invested $25 million in a new building, an 
enhanced fleet and a virtual reality attraction ahead of the busy 
summer season -- said Patrick Keyes, the firm's sales and marketing 
manager. "We are waiting to see the fallout," he said.

Canadian flight reservations to the US are down 70% through September 
versus the same period last year, according to a report by OAG Aviation 
Worldwide. Meanwhile US summer bookings are also down 25% among 
European tourists at Accor SA hotels -- which Chief Executive Officer 
Sebastien Bazin said could be attributed to border detentions creating 
a "bad buzz" and diverting tourists to other destinations.

"US tariff announcements and a more aggressive stance toward historical 
allies have hurt global opinions about the US," Goldman Sachs 
economists Joseph Briggs and Megan Peters said in a March 31 report.

"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," 
they said.

Despite the worsening outlook, Oregon's tourism commission -- known as 
Travel Oregon -- is continuing efforts to attract foreign visitors, 
said CEO Todd Davidson. His team just came back from a trip to pitch 
the state at an adventure tourism conference in Vancouver, and in the 
coming weeks they will be hosting sales and marketing partners from 
places like the UK, India and Brazil.

At the same time, they're also contemplating whether the commission 
will need to shift its strategy more toward domestic visitors as the 
situation unfolds.

"Oregon is not and will not take its eye off those international 
markets," Davidson said. "We will be here when our international 
visitors feel that they are ready to return."

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