US Economy Faces Billions in Losses from Declining Foreign Tourism and Product Boycotts

The US economy is poised to suffer significant revenue losses in 2025 due to a decline in foreign tourism and increasing boycotts of American products, raising concerns about the risk of recession.

Recent data from the International Trade Administration revealed that air travel arrivals of non-citizens to the US fell nearly 10% in March compared to the same month last year. Goldman Sachs Group Inc. projects that, in a worst-case scenario, the combined impact of reduced travel and boycotts could result in a 0.3% decrease in gross domestic product (GDP), translating to an estimated loss of nearly $90 billion.

Foreign tourism had previously bolstered the US economy, particularly as pandemic restrictions eased and international travel surged. However, potential visitors are now reconsidering their travel plans due to escalating border tensions, geopolitical conflicts, and overall global economic uncertainty.

Last year, international travelers contributed a record $254 billion to the US economy, according to ITA figures. Entering 2025, the outlook seemed bright, with projections indicating the US would receive 77 million visitors this year, just shy of the 2019 record, with expectations for further growth in 2026. However, these forecasts were made just before reports surfaced of harsh detentions at US airports affecting travelers from countries like France and Germany. In response, prominent Canadian institutions, including a pension management firm and a leading hospital, have begun advising employees against traveling to the US.

Bloomberg Intelligence warns that nearly $20 billion in retail spending from international tourists is now at risk. Early indicators of a downturn are evident, as airfares, hotel prices, and car rental rates fell in March, according to the Bureau of Labor Statistics. Economists from Goldman Sachs and HSBC Holdings Plc suggest that lower demand, particularly from foreign travelers, likely contributed to these declines.

Omair Sharif, president of Inflation Insights, noted that the drop in hotel rates was especially pronounced in the Northeast, where Canadian travel has significantly decreased. “Given what we know about how much Canadian travel has fallen off, that’s potentially a bit worrying for that region,” he remarked.

As the summer season approaches, the timing presents challenges for businesses reliant on tourism. Patrick Keyes, sales and marketing manager for Rainbow Air Helicopter Tours in Niagara Falls, which recently invested $25 million in new infrastructure and attractions, expressed concern about the potential fallout. “We are waiting to see the fallout,” he said.

Data from OAG Aviation Worldwide indicates that Canadian flight reservations to the US have plummeted by 70% through September compared to the previous year. Additionally, US summer bookings among European tourists have declined by 25%, a trend attributed to negative perceptions stemming from border detentions.

Goldman Sachs economists Joseph Briggs and Megan Peters noted in a March 31 report that “US tariff announcements and a more aggressive stance toward historical allies have hurt global opinions about the US.” They further warned that these challenges could lead to underperformance in US GDP growth expectations for 2025.

Despite the grim outlook, Oregon’s tourism commission, Travel Oregon, remains committed to attracting foreign visitors. CEO Todd Davidson highlighted recent efforts at an adventure tourism conference in Vancouver and plans to host sales and marketing partners from countries including the UK, India, and Brazil. However, he acknowledged the need to potentially pivot strategies toward domestic visitors as circumstances evolve. “Oregon is not and will not take its eye off those international markets,” Davidson affirmed. “We will be here when our international visitors feel that they are ready to return.”