Trump is making foreign tourism great again. How much will he hurt the World Cup?

International arrivals to the U.S. fell 5.4% in 2025 while global arrivals rose 4%, driven by a near 30% collapse in Canadian visits; Canada had generated ~20.4 million visits and US$20.5 billion in spending in 2024 supporting ~140,000 jobs. The drop—estimated to cost the U.S. about $30 billion in international tourism in 2025—is attributed to Trump-era policies (higher tariffs, tougher border enforcement, new $250 visa integrity fee, social-media screening and travel bans), adverse FX moves (weaker Canadian dollar) and cuts to Brand USA funding, and analysts warn the weakness may persist into 2026 despite the FIFA World Cup.

Analysis

Market structure: U.S. inbound tourism weakness (−5.4% in 2025; Canada ≈ −30%) reallocates demand to non‑U.S. destinations and domestic leisure. Winners: non‑U.S. hospitality/tourism providers and global OTAs; losers: U.S. casinos, short‑stay hotels and border retail reliant on Canadian day‑trips. Expect 3–10% local ADR/RevPAR pressure in affected markets (Nevada, Florida, border states) through 2026 absent policy change.

Risk assessment: Tail risks include abrupt visa/ban expansions or a World Cup boycott (low prob, high impact) and an unexpected policy U‑turn (also low prob) that would reverse flows. Near term (0–3 months) volatility clusters around World Cup booking windows and holiday seasons; medium term (3–12 months) driven by Brand USA funding, FX swings (USD/CAD) and 2026 tourism seasonality. Hidden dependencies: state-level tax receipts, municipal healthcare and property markets exposed to departing Canadian snowbirds.

Trade implications: Expect relative underperformance of US domestic leisure equities vs global peers; bond market impact is localized municipal revenue stress rather than sovereign. FX: CAD sensitive to sustained drop in cross‑border spend; oil/gas unaffected materially. Options: implied vols in hotel/casino names will reprice with summer booking updates—use calendar and vertical spreads to manage theta and tail risk.

Contrarian angles: The market overweights headline political risk vs persistent structural tourism demand — hardcore events (World Cup) still pull fans despite rhetoric, creating short windows for tactical long exposure in select US assets post any dislocation. Historical parallel: post‑2002 political shocks produced 6–12 month tourism dips followed by partial rebounds; policy permanence matters. Mispricings likely in large diversified hotel chains (HLT, MAR) where global exposure buffers U.S. weakness and are underowned by momentum funds focused on domestic leisure names.

Key Decisions for Investors

• Establish a 2–3% portfolio short via 6–9 month put spreads on MGM (MGM) and Caesars (CZR) combined: buy 6‑9m ATM puts and sell 10–15% OTM puts to limit cost; target 15–30% downside in share prices if RevPAR/visitor declines persist into H2 2026.
• Long Booking Holdings (BKNG) and Expedia (EXPE) 1.5–2% combined as beneficiaries of travel reallocation outside the U.S.; scale in on pullbacks >5% and target 12–20% upside into Q4 2026 as international non‑U.S. bookings reaccelerate.
• FX trade: take a 1–2% notional long USD/CAD position (spot or 3–6 month call spread) expecting a further 3–5% CAD weakness if cross‑border tourism and CAD demand remain depressed; place stop at −2% adverse move and trim if USD/CAD exceeds +5%.
• Reduce exposure to U.S. border‑state retail/REIT risk: trim Simon Property Group (SPG) and regional mall/retail REITs by 25–35% vs benchmark over 30–90 days and redeploy into European/Mexican resort REITs or global lodging ETFs (e.g., SHO or international equivalents) where tourist flows are rising.