Fewer international tourists are visiting the U.S. — economic losses could be 'staggering,' researchers estimate

A new Oxford Economics study forecasts an $8.5 billion, or 5%, decline in spending by foreign visitors to the U.S. this year, driven by an anticipated 9% drop in international arrivals. The decline is attributed to negative perceptions stemming from U.S. trade and immigration policies, with flight bookings already down 11% year-over-year; the World Travel & Tourism Council estimates potential losses could reach $12.5 billion in 2025, impacting communities and businesses nationwide.

Analysis

Oxford Economics projects a significant contraction in U.S. tourism revenue, with spending from foreign visitors anticipated to decrease by $8.5 billion, or approximately 5%, this year. This decline is directly linked to an expected 9% reduction in international arrivals, a trend primarily attributed to negative global perceptions of U.S. trade and immigration policies under the Trump administration. Corroborating this outlook, flight bookings to the U.S. for the May to July period were down 11% year-over-year as of April, with notable weakness from Europe (down over 10%) and Canada (down over 33%). The potential economic repercussions are substantial; the World Travel & Tourism Council forecasts a $12.5 billion loss in international visitor spending by 2025, while the U.S. Travel Association estimates a $21 billion revenue loss in 2025 if current trends persist, noting that each 1% drop in spending equates to $1.8 billion in lost annual revenue. This downturn contrasts sharply with Oxford Economics' prior expectations for 2025, which included a 9% growth in international arrivals and a 16% increase in their spending. Additional headwinds include a relatively strong U.S. dollar, which increases costs for foreign tourists, and broader concerns about global economic growth, partly fueled by trade policy uncertainty and tariff implementations.

Key Decisions for Investors

• Investors should exercise caution with U.S. sectors heavily reliant on international tourism, such as hospitality, airlines, and retail in key tourist destinations, given the projected $8.5 billion decline in visitor spending this year.
• Monitor leading indicators including international flight booking trends, the strength of the U.S. dollar, and any shifts in U.S. trade and immigration policies, as these are identified as primary drivers of the negative outlook for tourism.
• Consider re-evaluating exposure to companies with significant revenue derived from foreign tourists in the U.S., and explore potential diversification or hedging strategies if these adverse conditions persist or worsen.