US travel sector faces major slowdown as Donald Trump’s tariff policies hit tourism, consumer sentiment
The US economy may lose tens of billions of dollars in 2025 as weakening travel demand, driven by declining international tourism and softer domestic spending, casts a shadow over the services sector, reported Reuters.
Analysts warn that US President Donald Trump’s aggressive trade policies and tariff-driven uncertainty are eroding global sentiment and hurting travel-related industries.
Foreign travel spending alone is projected to trim 0.1% from US GDP this year, with Goldman Sachs and JP Morgan estimating the impact could rise to between 0.2% and 0.3%.
Given the first-quarter GDP figure of $23.53 trillion, as per LSEG data, this translates to a potential loss of $23 billion to $71 billion, as per Reuters.
“Anti-American sentiment could be driving a decline in international tourism, which is considered a service export,” JP Morgan said in a recent note, citing falling overseas visits to the US as global travellers turn away from American destinations.
The downturn in travel sentiment has also been reflected in corporate outlooks. Delta Air Lines recently abandoned its full-year forecast, noting that international travel demand had “largely stalled.”
Several major carriers, Southwest, American, Alaska Air, and Frontier, have all pulled their guidance, while United Airlines issued two separate forecasts amid growing trade-related uncertainty.
The industry hasn’t faced this level of unpredictability since the Covid-19 pandemic.
Airbnb forecasted a second-quarter revenue below Wall Street expectations, and Hilton said many travellers remain in a “wait-and-see” mode. According to Goldman Sachs, “Tariff announcements and a more aggressive stance toward historical allies have hurt global opinions about the United States… The bigger issue is a pullback in tourist visits to the US.”
Consumer behaviour domestically also signals a retreat from discretionary spending. Household budgets remain under pressure, with fears of a recession prompting Americans to cut back. Bank of America-aggregated card data showed a noticeable slowdown in spending on lodging, tourism, and airlines through the week ending March 22.
According to JP Morgan, foreign visitor spending contributed $215 billion or 0.7% to US GDP in 2024. A 10% decline in that spending would equate to a direct seven-basis-point hit to GDP, it noted.
The broader travel and tourism sector, which made up 3% of GDP and supported over six million jobs in 2023, is now confronting its weakest start to the year in recent times. Earlier this week, official data showed that the US economy contracted in Q1 2025 for the first time in three years, further underscoring the fragile state of consumer confidence.
