US Trade War: Impact on the Travel Industry

A trade war caused by President Donald Trump pulling out of international agreements would hit the US travel industry, according to Euromonitor International research presented in the WTM London (World Travel Market London) this year.

If Trump pulls out of the North American Free Trade Agreement (NAFTA) – as he has threatened to do – then travel between the US and Mexico would drop significantly, and US-Canada travel would dip slightly. The research reveals that if the US drops out of NAFTA and imposes a 35% tariff on Mexican imports, followed by Mexican retaliation, the impact on regional travel would be considerable. Trips from the US to Mexico are estimated to fall by 8.5% between 2017 and 2020 in a Trump Trade War scenario run on Q4 2017, while travel in the opposite direction, Mexico to the US, would tumble by 18.5%. Travel between the US and Canada would also fall but by a smaller margin of about 1.8% over 2017-2020.

The US dominates the Top 100 ranking among cities in the Americas, but with Donald Trump in the White House, future performance is unsure. Although still seeing positive growth, US arrivals witnessed a decline of -3.9% year to date June 2017 according to the US National Travel and Tourism Office, due to a strong dollar and growing political uncertainty.

According to this year’s Top 100 City Destinations Ranking Report seven of the 10 Americas cities in the Top 100 are in the US. However, in the wake of Trump’s policy changes, it is expected that the 2017 performance of these cities will fall behind those in Canada and Latin America. New York City is the clear leader in the Americas. To many, it might seem that the city is untouched by what is happening in Washington DC, but NYC & Co has revised its forecasts for 2017, expecting a potential fall of 300,000 visitors, although this is likely to be a worst-case scenario.

Euromonitor International presented the Top 100 City Destinations Ranking Report at WTM London event November 2017.