US Faces Billions In Losses As Tourists Avoid American Products

The US economy faces a potential revenue loss in 2025 due to declining foreign tourism and boycotts exacerbating recession risks. A drop in international air arrivals and negative perceptions stemming from border hostility and geopolitical tension contribute to this downturn. Experts estimate a prominent GDP impact, prompting concerns across various sectors despite ongoing efforts to attract international visitors.

The US economy is all 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. According to data published Monday by the International Trade Administration, arrivals of non-citizens to the US by plane dropped almost 10 per cent in March from a year earlier. Goldman Sachs Group Inc. estimates that in a worst-case scenario, the hit this year from reduced travel and boycotts could total 0.3 per cent of gross domestic product, amounting to almost USD90 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 cancelled an upcoming US vacation after President Donald Trump imposed punitive tariffs on his home country and suggested it should become the 51st US Oregon over the years. This year, they will be travelling around British Columbia instead.

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

Allen's hesitation doesn't stop there. He cancelled his Netflix subscription and actively avoids American imports at the grocery store. "Now it takes us double the time because we are looking at where the products came from," he said.

According to ITA figures, international travellers spent a record USD 254 billion in the US last year. In 2025, the outlook was positive: The ITA projected that in early March, 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 ensured travellers from countries like France and Germany started making headlines. Meanwhile, the largest group of foreign tourists in the US are choosing to stay put as Trump ramps up attacks on the country's economy and sovereignty. According to a Bloomberg Intelligence analysis, almost USD 20 billion in retail spending from international tourists in the US may be at risk. 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 Labour Statistics report on consumer prices published April 10. Economists at Goldman Sachs and HSBC Holdings Plc said lower demand, including from foreign travellers, probably played a role.

Omair Sharif, president of Inflation Insight, noted that the decline in hotel rates was driven by an almost 11 per cent drop in the Northeast, possibly due to fewer Canadians travelling there.

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

 Summer Season

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

Canadian flight reservations to the US are down 70 per cent through September compared to the same period last year, according to a report by OAG Aviation Worldwide. Meanwhile, US summer bookings are also down 25 per cent among European tourists at Accor SA hotels, which Chief Executive Officer Sebastian Bazin said could be attributed to border detention 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 UD GDP forecast, why US GDP growth will likely underperform consensus expectations in 2025," they said.

According to CEO Todd Davidson, Oregon's tourism commission, TravelOregon, is continuing efforts to attract foreign visitors despite the worsening outlook. His team just returned 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 the UK, India, and Brazil.

At the same time, they are 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 there when our international visitors feel ready to return.

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