U.S. Economy Faces $900 Billion Loss as Tourism Declines 10%

In 2025, the U.S. economy is projected to lose tens of billions of dollars due to the decline in international tourism and the boycott of American products. This adds to the growing list of unfavorable factors, increasing the risk of an economic recession.

Data released by the U.S. International Trade Administration shows that the number of non-U.S. citizens arriving by air in the U.S. in March decreased by nearly 10% compared to the same period last year. In the worst-case scenario, the total loss from reduced tourism and boycotts this year could reach 0.3% of GDP, equivalent to nearly $900 billion.

In recent years, international tourism has been a boon to the U.S. economy as travel restrictions eased during the pandemic. However, with increasing border hostility, escalating geopolitical tensions, and global economic uncertainty, many potential tourists are now rethinking their vacation plans.

One such tourist is Canadian photographer Curtis Allen. After Donald Trump imposed punitive tariffs on his home country and suggested that Canada should become the 51st state of the U.S., Allen canceled his upcoming vacation plans to the U.S. For years, Allen and his partner had camped in Oregon, but this year, they will travel to British Columbia instead.

“We’re not just staying home,” said the 34-year-old Allen. “We’ll spend the same amount of money elsewhere.”

Allen’s hesitation doesn’t stop there. He has also canceled his Netflix subscription and actively avoids American imported goods at the grocery store.

“Now we have to spend double the time because we have to check where the products are from,” he said.

According to data from the U.S. International Trade Administration, international tourists spent a record $254 billion in the U.S. last year. The outlook for 2025 was originally optimistic: the U.S. International Trade Administration predicted in early March that the U.S. would welcome 77 million tourists this year, slightly below the 2019 record, and then reach a new high in 2026.

However, these forecasts were made before reports of strict detentions of tourists at U.S. airports, involving tourists from countries like France and Germany, became headline news. Meanwhile, as the largest group of foreign tourists to the U.S., Canadians are choosing to stay home as Trump escalated his attacks on Canada’s economy and sovereignty.

Early signs of a significant decline are already apparent. According to a monthly report on consumer prices released by the U.S. Bureau of Labor Statistics on April 10, airfare, hotel prices, and car rental costs all fell in March. Economists from Goldman Sachs and HSBC Holdings said that a decrease in demand, including demand from foreign tourists, could be one of the reasons.

Omar Sharif, president of Inflation Insights, noted that the decline in hotel prices was particularly driven by an 11% drop in the Northeast, which could be a result of fewer Canadian tourists visiting the region.

“Given what we know about the decline in the number of Canadian tourists, this could be a bit concerning for that region,” Sharif said.

Patrick Casey, sales and marketing manager for Rainbow Air Helicopter Tours at Niagara Falls, said the timing is “very interesting” for his company. The company has just invested $25 million in a new building, expanded its fleet, and added a virtual reality attraction ahead of the busy summer season. “We’re waiting to see what the outcome will be,” he said.

According to a report by OAG Aviation, bookings for flights from Canada to the U.S. have decreased by 70% compared to the same period last year. Meanwhile, summer bookings for hotels under the Accor group have decreased by 25% for European tourists. The group’s CEO, Sebastien Bazin, said this could be due to the “negative impact” of border detention incidents, causing tourists to turn to other destinations.

Economists Joseph Briggs and Megan Peters of Goldman Sachs said in a March 31 report: “The U.S. tariff declarations and a tougher stance on traditional allies have damaged the global perception of the U.S.”

They also noted: “In addition to the more direct negative impact of tariffs and the drag on exports from foreign retaliation (which have already been factored into our U.S. GDP forecasts), this unfavorable factor provides another reason why U.S. GDP growth in 2025 may fall below consensus expectations.”

Despite the increasingly bleak outlook, Todd Davidson, CEO of the Oregon Tourism Commission, said they are still working to attract foreign tourists. His team has just returned from a promotional trip to Vancouver, and in the coming weeks, they will host sales and marketing partners from the U.K., India, and Brazil.

At the same time, they are considering whether the tourism commission needs to shift its strategy more towards domestic tourists as the situation develops.

“Oregon will not, and will never, ignore those international markets,” Davidson said. “When our international tourists feel ready to come back, we’ll be here waiting for them.”