Trade and Immigration Policies Slash US Tourism by 10% in 2025

International travelers are steering clear of the United States in 2025, with early data showing a 10% drop in tourism compared to the previous year. The decline, tied to trade disputes and fears of stringent immigration policies, is raising alarms about economic ripple effects. Hotels, restaurants, and even universities, which rely on foreign visitors, are feeling the pinch. JPMorgan economist Michael Feroli estimates this slump could shave 0.1% off U.S. GDP this year, a seemingly small but significant hit for industries dependent on global visitors.

The timing of the downturn, coinciding with the Easter travel season, caught analysts off guard. After adjusting for calendar differences, the drop in arrivals is stark, particularly from key markets like Canada and Europe. This isn’t just about fewer vacationers; it’s a signal of shifting global perceptions of the U.S. as a welcoming destination. Businesses are now grappling with how to adapt to a landscape where international sentiment is increasingly shaped by policy decisions.

At the heart of the tourism decline are trade policies that have sparked tensions with major partners. The America First Trade Policy, rolled out in early 2025, imposes reciprocal tariffs on countries with trade practices deemed unfair. While aimed at bolstering U.S. manufacturing and reducing trade deficits, the measures have triggered retaliatory tariffs and strained diplomatic ties. Allies and trading partners alike have voiced concerns about protectionism, with some issuing subtle travel advisories that dampen enthusiasm for U.S. visits.

Historical patterns offer context. During the trade wars of the late 2010s, tit-for-tat tariffs led to similar dips in international travel. The 2003 Iraq War also saw a sharp but brief decline in tourism as global sentiment soured. Today’s frictions, however, are compounded by broader geopolitical unease, from ongoing conflicts in Eastern Europe to airspace restrictions affecting flight routes. These dynamics make the U.S. a less appealing destination for some, even as other regions like Asia see tourism surges thanks to relaxed visa policies.

Immigration policies are another factor driving the tourism slump. Recent proposals to tighten visa rules and crack down on undocumented immigration have raised fears of overreach, deterring even lawful visitors. Noncitizen air arrivals dropped nearly 10% in March 2025 compared to the prior year, with Canada, which accounts for over a quarter of U.S. tourism, seeing a 70% plunge in flight bookings through September. Travelers worry about heightened scrutiny or unexpected barriers at U.S. borders, prompting many to choose alternative destinations.

The economic stakes are high. Goldman Sachs projects that reduced tourism and related boycotts could cost the U.S. economy nearly $90 billion in 2025, as international visitors spend less on hotels, dining, and attractions. Beyond dollars and cents, these policies risk reshaping the U.S.’s image as an open, accessible nation. Yet, some argue stricter immigration measures are necessary to prioritize national security and economic stability, highlighting the delicate balance between openness and caution.

The tourism decline is hitting service industries hardest. Hotels and restaurants, which thrive on foreign spending, are reporting lower bookings and revenue. Universities, too, are affected, as international students contribute significantly to tuition and local economies. In March 2025, the U.S. services sector expanded, but at its slowest pace since mid-2024, with the Services PMI dipping to 50.8%. Industries like accommodation and food services grew, but others, including entertainment and recreation, contracted amid rising costs tied to tariffs and policy uncertainty.

National sentiment plays a role here. When confidence wanes, whether due to trade disputes or immigration crack, consumer spending in service sectors often takes a hit. Historical downturns, like the Great Recession, showed how quickly sentiment can shift, dragging down discretionary industries like tourism and hospitality. Businesses now face the challenge of navigating this uncertainty while hoping for a rebound in global confidence.

Globally, tourism is booming, with 2025 projected to generate nearly $956 billion in revenue. Asia, in particular, is seeing rapid growth, fueled by visa waivers and strategic partnerships in countries like Malaysia and Singapore, which reported a 150% jump in arrivals in 2024. Meanwhile, regions plagued by conflict, like Eastern Europe and parts of the Middle East, face declining travel demand. The U.S., despite its economic might, is caught in a unique bind, where self-imposed policies, rather than external shocks, are driving the downturn.

Travelers are also changing their habits, favoring lesser-known destinations and prioritizing wellness and sustainability. These trends could offer opportunities for the U.S. to rebrand itself as a forward-thinking destination, but only if it addresses the perceptions fueling the current decline. For now, the industry remains adaptable, with AI-driven travel planning and flexible booking policies helping businesses weather the storm.

The U.S. tourism slump underscores the intricate link between policy, perception, and economic outcomes. While past declines, like those in 2003, proved temporary, today’s challenges are tied to ongoing trade and immigration debates that show no signs of quick resolution. Stakeholders, from hotel chains to policymakers, are urging a recalibration to restore the U.S.’s appeal without compromising its economic or security goals. The path forward requires balancing openness with pragmatism, a task easier said than done.

For everyday Americans, the impact is tangible: fewer tourists mean fewer jobs and less revenue for communities reliant on visitors. Yet, the broader lesson is universal. In an interconnected world, policies ripple far beyond borders, shaping how nations are seen and where people choose to go. As the U.S. navigates these turbulent times, its ability to project stability and hospitality will determine whether it can reclaim its place as a top global destination.