Tourism's Troubled Turn: How Foreign Boycotts Are Shaking U.S. Businesses

The U.S. tourism industry, once a cornerstone of economic growth, is now facing a reckoning. A confluence of geopolitical tensions, punitive trade policies, and shifting traveler sentiment has sparked a boycott movement that threatens to reshape the sector’s fortunes. With Canadian travelers cutting visits by 21% and European arrivals plunging 17% from key markets like Germany and the Netherlands, businesses from airlines to hotels are bracing for a prolonged downturn. The stakes are high: Goldman Sachs warns that reduced tourism could shave 0.3% off U.S. GDP this year, a $90 billion hit. Let’s unpack the crisis—and what it means for investors.

The Canadian Boycott: Ground Zero of the Crisis

Canada, which sends 25% of all foreign visitors to the U.S., has become the epicenter of the boycott. Summer flight bookings from Canada fell 21% year-over-year in 2025, while land crossings at major border points like Niagara Falls and Vancouver-Seattle plummeted 42–48% in March. The trigger? A toxic mix of U.S. tariffs on Canadian goods, rhetoric about annexing the country as the “51st state,” and reports of harsh border treatment, such as phone searches and prolonged detentions.

Air Canada’s financials tell the story: passenger revenue on Canada-U.S. routes dropped 4.6% in Q1 2025, with traffic down 7%. The airline slashed its 2025 profit forecast by $144 million, citing “low teens” booking declines for transborder travel through September. Meanwhile, U.S. destinations like New York City face a projected $4 billion tourism revenue drop, with 800,000 fewer international visitors expected in 2025—half of them Canadians.

Investment Signal: Airlines like United (UAL) are feeling the pinch. While international demand remains “resilient” for some routes, inbound travel from Canada and Europe has softened, with bookings down 2% globally (excluding Canada). Analysts warn that reduced capacity and pricing power could linger through 2025.

Europe’s Mixed Signals—and Asia’s Wildcards

While Canada’s boycott dominates headlines, European trends are split. Spain, Ireland, and Portugal saw bookings surge 8–11%, capitalizing on weaker currencies and a shift toward “safer” destinations. But Germany and the Netherlands—key U.S. tourism markets—suffered declines of 12–17%, likely tied to economic slowdowns exacerbated by U.S. trade policies.

Asia presents a puzzle. Japan’s stronger yen fueled a 11% rise in U.S. bookings, while South Korea and China dipped 5–7%. Latin America also split: Argentina’s bookings soared 39%, but Mexico and Ecuador declined 9–11%.

Sector Spotlight: Northeast U.S. hotels, which rely heavily on Canadian visitors, are hardest hit. Rates have fallen 11% as demand dries up, according to Inflation Insights. Meanwhile, Orlando’s focus on domestic and Brazilian tourists (up 4%) has insulated it—so far.

The Economic Domino Effect

The boycott’s ripple effects stretch far beyond travel. Foreign tourists spent $254 billion in 2024, but 2025 projections now face a $64–90 billion shortfall. Retailers are feeling the pain: Canadians like videographer Curtis Allen are avoiding U.S. stores, while Bloomberg Intelligence warns up to $20 billion in retail spending could evaporate.

Even iconic attractions are struggling. The Empire State Building reported a 5% drop in Q1 attendance, and sightseeing buses saw 25% fewer foreign riders. With airlines like American (AAL) and Delta (DAL) trimming flight schedules and hotels slashing rates, the sector’s 2.5% GDP contribution is under siege.

Investor Playbook: Navigating the Fallout

1. Avoid Overexposed Sectors: Airlines (UAL, AAL) and Northeast hotels (MAR, HLT) face near-term headwinds. Look for steep discounts or wait for clearer demand signals.
2. Bet on Resilient Markets: Focus on regions less reliant on international tourists, like Orlando or domestic-only chains like Hyatt (H).
3. Monitor Geopolitical Shifts: A resolution to U.S.-Canada trade disputes or improved border policies could spark a rebound. Track U.S.-Canada trade volumes as a leading indicator.
4. Consider Defensive Plays: ETFs like the iShares U.S. Travel & Tourism ETF (IYTN) offer diversified exposure but may underperform until clarity emerges.

Conclusion: A Crossroads for U.S. Tourism

The 2025 boycott isn’t just a hiccup—it’s a wake-up call. With $90 billion at risk and Canadian arrivals down 21%, businesses must adapt or face years of stagnation. The path forward hinges on diplomacy: resolving trade wars, improving border policies, and rebuilding trust with allies.

For investors, the calculus is clear. While sectors like airlines and Northeast hotels face short-term pain, those with exposure to domestic or resilient international markets (e.g., Brazil, Japan) may weather the storm. But with geopolitical tensions simmering and recession risks looming, patience—and a long-term view—are critical. The U.S. tourism industry isn’t dead—yet. But its revival depends on more than just good weather.

Final Take: The data is stark. Without a policy shift, 2025 could mark the start of a prolonged tourism downturn. Investors who heed these warnings—and bet on resilience—will be best positioned for when the skies clear.