The Impact of
U.S. Tariffs on Global Tourism:
A Strategic Analysis
by Dr. Manida Xongmixay-Lau, CHP
The Trump administration’s policy of
imposing tariffs on products and
services from countries with which the
United States has a trade deficit has
raised critical questions regarding its
broader economic repercussions,
particularly for global tourism. This
article offers a strategic exploration of
the implications.
Economic Theory: Tourism as an
Export Sector
Import tariffs do not directly affect the
tourism sector. In economic theory,
tourism is classified as an export
sector, not an import. Like traditional
exports, tourism sells goods and
services to foreign consumers,
generating foreign exchange and
boosting national GDP.
Specifically:
Tourism boosts foreign exchange
earnings through spending on lodging,
transport, food, and activities.
•It stimulates national output
through employment creation,
support for local businesses, and
government revenue generation.
•Tourism competes
internationally, influenced by
exchange rates, economic
conditions, and evolving travel
trends.
•Governments actively develop
tourism as an export strategy,
fostering competitiveness and
attracting foreign visitors.
The hospitality industry, which
encompasses transportation services
such as airlines, cruise ships, and taxis;
accommodations such as hotels,
homestays, and resorts; entertainment
venues like casinos, festivals, and
shopping malls; and retail sectors such
as souvenirs and goods, directly
benefits from inbound tourism.
Thus, the Trump tariffs do not
immediately affect the prices tourists
pay when traveling to the U.S., but
they may influence the broader
ecosystem of travel behaviors.
Understanding the Source of
International Visitors
Contrary to common perception, most
international tourists originate from
neighboring countries rather than
distant locations. In 2024, nearly 50%
of the 78 million international visitors
to the U.S. were from Canada (20
million) and Mexico (17 million).
Historical and cultural ties also drive
tourism flows, as seen in the travel
patterns between France and its former
African colonies or Dutch tourists
visiting Indonesia.
Decision-Making Drivers for
Holiday Destinations
Countries heavily invest in tourism
promotion, but understanding how
tourists select destinations is critical:
1.Personal Factors: Demographics,
income, education, prior
experiences, and motivations (fun,
novelty, mental relaxation, escape
from routine).
2.Destination Factors:
Accessibility, affordability,
cultural offerings, natural
attractions, and visa requirements.
3.Contextual Factors: Seasonality,
available vacation days, and travel
companions.
Notably, the final choice relies heavily
on emotions rather than solely rational
analysis. Tourists seek happiness,
novelty, and a sense of escapism,
prioritizing emotional resonance over
cost-benefit calculations.
Holidays: Pursuit of Happiness
Amid Uncertainty
Tourists thoroughly prepare to mitigate
uncertainties, including transportation,
accommodations, cultural norms, and
payment options. Experienced travelers
and those with higher education levels
show greater resilience to unforeseen
events. However, more than actual
risks, perceptions of risk influence
destination choices.
Emotions significantly color
perceptions, decision-making, and risk
assessments. Fear, excitement,
CXO Article
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