An Update on the “Trump Slump” in Tourism

In June of last year, we issued our first report on the “Trump Slump” in international tourism, outlining the economic cost of President Trump’s Muslim travel ban, anti-immigrant policies, visa rollbacks, and harmful rhetoric about Mexicans, Muslims, and “shithole countries.” Over the 16 months that followed, the Trump Slump appears to be getting worse.

International tourism is America’s second-largest export, accounting for 10% of U.S. exports. Foreign tourists contributed $256 billion to our economy last year and directly supported 1.2 million jobs. Tourism isn’t just big; it’s job-intensive. Each million dollars in tourism exports support about 3 times more jobs than the average export.

Tourism varies according to the global economy, travel trends, and currency valuations, among other factors, but industry experts agree that trade tensions and the U.S. political climate are having a significant – and totally avoidable – impact on U.S. airlines, hotels, restaurants, and tourist attractions.

America’s standing in the world has fallen dramatically as a result of Trump’s policies and rhetoric. As global confidence in the U.S. president fell from 55% under Obama to 27% under Trump, the share of the world that sees U.S. power as a major threat grew from 25% (Obama, 2016) to 45% (Trump, 2018).

This matters, because 80% of travel to the U.S. is for pleasure, not work. Travelers who do not feel safe or welcome in the U.S. can switch easily. Consider these examples:

  • Mexicans account for about one-fifth of foreign visits to the U.S. each year. When Trump calls Mexicans “rapists” and insists they’ll pay for his wall, Mexicans can switch their ski vacations from Vail to Vancouver.
  • Muslims represent one fourth of America’s potential customers. Trump, reasoning that “Islam hates us,” instituted a Muslim travel ban his first week in office.
  • Chinese tourists spend more than $7,000 each time they visit, on average. That’s $3,000 more than the average tourist. For 9 years, tourism from China grew 23% each year, on average. In 2018, it didn’t grow at all. Experts attribute much of the abrupt change to Trump’s trade war.

The global tourism industry is booming. It grew at twice the U.S.’s rate last year (6% vs. 3%), which caused the U.S.’s share of global tourism to shrink for the third straight year. Had the U.S. maintained the market share it enjoyed in 2015, U.S. businesses would have enjoyed 14 million more visits and $59 billion in additional income. This additional business would have supported an additional 120,000 U.S. jobs.

Our market share is likely to fall again. Preliminary results from the first half of 2019 suggest that global tourism increased 3 to 4%, while the U.S. shrank 1.7%. Trump, a hotelier, should appreciate the pain he’s causing.

Read the issue brief here.