Kaia Matheny (left) and Nora Lamphiear (right) co-owners of Adrift Restaurant in Anacortes, Washington.
Kaia Matheny.
Anacortes, a small coastal town in Washington, is usually bustling with tourists during the summer.
However, local business owners like Kaia Matheny are branching out due to less pedestrians and economic hits as tensions over this year’s trade and immigration policy and are worried that foreigners will reconsider the US as a destination.
Matheny is co-owner of Adrift Restaurant, a voyage-themed farm-to-table eatery in downtown Anacortes. The town, the gateway to the San Juan Islands, is a two-hour drive south of Vancouver.
She found sales were declining amid fewer customers from Canada. This is generally the top source of international visitors in the US. According to tourism economics, aviation and land arrivals from Canadians fell by 14% and 32%, respectively, compared to the same period in 2024.
A significant decline in pedestrians among foreign tourists appears to be set to last until summer, data shows. Matheny is “watched” about what it means during the peak season, which usually begins in June.
Tourism “is not normal,” Matheny said. “We hit the hatch and make the most of it.”
“Speed and sour” travel outlook
Tourism spent more than $180 billion here in 2024, according to Geoff Freeman, president and CEO of the American Travel Association.
However, according to Oxford Economics, international visits to the US fell 12% year-on-year in March.
According to the American Travel Association, it’s not just Canada. Visits from Western Europe, Asia and South America have historically declined by double digits – the most valuable travel market in the US.
Data suggest that weaknesses last up until summer.
Air bookings for overseas summer trips to the US were paced about 10% behind the same period last year, according to Tourism Economics, which is affiliated with Oxford Economics. (These were bookings made as of March.)
Canada and Mexico are even worse, data shows. For example, summer bookings from Canada to the US have dropped by more than 30%.
“Foreign visits to the United States are the country’s largest export of services, and the outlook is quickly getting sour,” wrote Ryan Sweet, a US economist at Oxford Economics, in a research note published in May.
International tourism losses are expected to cost the US economy $10 billion this year compared to 2024, according to Adam Sachs, president of tourism economics. The American Travel Association is keeping a potential loss of another $21 billion in 2025 if the current travel trend continues.
“It’s amazing,” Freeman said. Many businesses and destinations “rely rely on international visitors in particular.”
With active tourism growth elsewhere, tourism pullbacks appear to be a “current US problem” rather than a broad global weakness in travel.
Domestic tourism is not poised to pick up slack. The market is moving towards 2025, and the “revenge trip” trend has mainly been unfolding, although it has forced Americans to travel due to pent-up demand after the Covid-19 lockdown.
“I don’t think it’s all fate and bleak for the US travel industry,” Sireo said. “But that’s going to be a tough year.”
Travelers have “many fears”
US Customs and Border Security at Newar Liberty International Airport.
Nicolas Economou/Nurphoto via Getty Images
Travel experts say many factors are supporting the decline in international visitors.
For one thing, President Donald Trump announced several tariffs, sparking fears about the world trade war, raising average import tariffs to the highest level since the early 1900s.
The trade war is “essentially fighting” with the international community, Sachs said.
In early April, China issued a risk alert to tourists heading to the US, citing worsening economic ties and domestic security. Several European countries have also recently issued US travel advisories, citing reasons such as rising border security and potential issues with travel documents.
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Trump has also attracted the anger of Canadian citizens and lawmakers through repeated proposals that Canada will become the 51st US state, experts said. Similarly for Greenland, part of Denmark.
“It’s still time to choose Canada,” former Prime Minister Justin Trudeau said in a speech in February. “It could mean changing our summer vacation plan to stay in Canada and exploring the many national parks, historic places and tourist attractions our great nation offers,” he added.
Searches conducted in March and April for travel from Canadians to the US fell 50% from 2024, according to Beyond, a data provider for the global short-term rental market.
“After tariff news broke in February, Canada’s search activity fell almost immediately,” wrote Julie Brinkman, CEO of Beyond, in an email. “While interest in the US has declined, Mexico saw a 35% increase in searches, indicating that travelers have not cancelled their trips. They are choosing a new destination.”
Social media anecdotes support that concept.
“I’m proud to cancel three US-based cruises over the next two years and take vacations in Europe and Canada instead,” one Reddit commenter wrote recently.
The growing concerns related to US immigration policy are perhaps the most consequential development in recent months, experts said.
“There is a perception that more people are being detained, and more devices are being detained, whether fair or not. [are] Searched and legal travelers [are] They were deported to the country of their origin, Freeman said. “It creates great fear.”
Within lost customers, business profits decrease “sharply”
Aaron Terrazas, an economist at Gusto, a salary and benefits provider, said small and medium-sized business profits have already “deteriorated” amid slowing travel.
According to Gusto, the share of profitable “tourism” companies fell from 41% and 43% in April 2025, April 2023 and 2023 to 32%, respectively. This category includes tour operators, condo or timeshare institutions, ticket or booking institutions.
The share of the profitable “accommodation” business has dropped from 44% and 45% to 36%, Gusto found. This category includes small hotels and motels, guesthouses, cottages and cabins, RV parks and campsites.
Tourists will visit Wall Street’s Charging Bull in Lower Manhattan, New York City on March 28, 2025.
Spencer Platt | Getty Images News | Getty Images
Slow traffic for customers and slow losses in revenue are the main perpetrator, not increased costs due to inflation or labor costs, Terrazas said.
The erosion of profitability and revenue is “extraordinarily sharp, unusually sudden, especially at a time when travel begins to pick up normally,” Terrazas said. “There is no obvious reason domestic travel is so sharp and suddenly collapsed in a month, but international travel has a more obvious explanation.”
The longer the slowdown continues, the more likely it is for businesses to make tougher choices and cut staff, Terrazas said.
Foreign visits to the US are the country’s largest export of services, and the outlook is quickly sour.
Ryan Sweet
Chief Economist at Oxford Economics
Financial losses come when the US has not returned to travel at pre-pandemic travel levels, putting even more pressure on tourism-dependent businesses, Freeman said. He said the US welcomed 72 million foreign visitors in 2024 and 78 million shy in 2019.
While non-residents account for less than 10% of U.S. tourism demand, Freeman said they are far more “money” spenders.
The average international visitors spend more than $4,000 per person, more than eight times the average American tourist spends domestically, Freeman said. The average tourist in Canada and Mexico spends $1,200 per visit.
“It’s community impact.”
Less foreign travel will have a disproportionate impact on certain areas.
Las Vegas; Los Angeles; Miami; New York; Orlando, Florida. San Francisco, for example, accounts for the largest share of foreign tourists, says Sweet of Oxford Economics.
New York has a large, diverse economy that could absorb tourism losses without falling into a recession, but perhaps not in places like Las Vegas or Honolulu, he said.
Tourists take photos near the Las Vegas Strip.
Robin Beck | AFP | Getty Images
“These economies are very sensitive to tourism,” Sweet said. “This is their main economic driver.”
So far, Adrift Restaurant co-owner Matheny has dropped 4% in monthly sales compared to last year.
The restaurant had to cut purchases at comparable prices, she said. It hurts the local economy of Anacortez, as restaurants source most of the food from local farms and fisheries.
“It’s a community impact,” she said.
