The travel and tourism sector, contributing approximately 3% to the U.S. GDP, has historically been among the strongest parts of the economy, notably in terms of trade; the country consistently recorded a trade surplus in travel each year this century. That trend changed this year.
A decline in international travelers to the U.S. led to a 7.8% yearly decrease in the actual value of travel service exports during the initial quarter, as stated in the GDP report issued on Wednesday.
U.S. Travel Association
indicates that the United States currently has an annual travel trade deficit of $50 billion, as opposed to a $3.5 billion surplus in 2022.
This likely indicates heightened animosity from numerous foreign individuals toward the U.S., along with fears of.
harassment by ICE officers
,” Dean Baker, the senior economist at the Center for Economic andPolicy Research, noted in his writing.
his note
examining the initial quarter GDP figures. “It’s probable that we’ll observe additional decreases in upcoming quarters, particularly concerning students enrolling to study in the United States.”
There was an 11% decrease year over year in the enrollment of international students from March of last year to this March, as reported.
Institute of Educational Enrollment
The group anticipates that this decline will lead to a reduction of approximately $4 billion in expenditures.
Other data supports the bleak forecast for travel. The International Trade Organization
reported earlier this month
The entry of non-citizens into the United States via airplane has decreased by over 11% since March 2024.
Tourism Economics
Recently, a company that monitors the hospitality sector revised its prediction for foreign tourists visiting the U.S., now forecasting a 9.4% decrease for the year instead of the previously projected 9% growth from December. As a consequence, they estimate that international tourist expenditures within the country will drop by 5%, equating to a loss of approximately $9 billion this year.
The company stated that Trump’s policies and statements have led to a decline in positive sentiment towards the U.S. among international visitors.
U.S. airlines are experiencing difficulties. A number of them have faced challenges lately.
changed their projections
For the entire year, as tariffs, inflation, and uncertain consumer demand led to a reassessment of predictions for 2025, the Dow Jones Airlines Index fell by 30.17% compared to the same period last year, and the DJ Hotels Index dropped by 14.12%. Both indices reached their lowest points over the past year on April 8th.
Not every piece of travel-related information is negative. The year-over-year comparison for air travel might have been adversely affected this time due to Easter being in April rather than March as it was last year, which altered patterns of holiday travel.
analysis
as reported by The New York Times (
NYT
It was discovered that international entries into U.S. airports have decreased by just 1.5% this year, and airlines report that reservations for travel from the U.S. to Europe are increasing.
Booking Holdings (
BKNG
), the parent company of Booking.com and Priceline,
reported
strong initial-quarter profits were reported on Tuesday, showing an increase of 7% in bookings and an 8% rise in revenue. Nonetheless, CEO Glenn Fogel admitted in the company’s financial statement that “the current market faces uncertainties regarding the short-term geopolitical and economic conditions.”
The prospects for international travel do not seem likely to get better, considering that the first-quarter GDP figures were released prior to President Donald Trump’s announcement on April 2nd imposing significant tariffs on nearly all countries. The organization Tourism International mentioned that a large part of their reduced prediction for visitors coming to the U.S. can be linked to worldwide reactions to Trump’s “America First” policy stance. They also pointed out that the statistics from March show trends among foreign tourists made before his ‘Liberation Day’ tariff declaration, potentially leading to more negative responses.
There has been evident pushback from Canada, where residents have distanced themselves from Trump’s suggestion of turning their country into the 51st state. Statistics show that in March, the number of Canadians embarking on road trips to cross the US border dropped by 32% compared to March 2024. Additionally, there was a decrease of 13.5% in Canadian air passengers traveling to the United States during the same period, as reported.
Statistics Canada
Advance reservations for flights traveling from the U.S. to Canada during the April to September timeframe were down over 70% compared to the previous year.
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