Canadians pull back on U.S. trips, threatening to widen travel deficit

Canadians are skipping trips to the U.S. and visitors from other countries could soon follow threatening to deepen the United States’ $50 billion travel deficit.

Experts say they’re pulling back for a variety of reasons, ranging from an unfavorable currency exchange rate to the U.S. political climate given President Donald Trump’s trade policies and his public statements on annexing Canada, as well as high-profile detainments of people who already had visas to be in the U.S., long wait visa times and other policies that have added to tensions with longtime close allies.

The trends are worrying some in the United States’ travel industry, which draws in more than $1 trillion in direct spending a year.

The U.S. Travel Association said in a statement to CNBC that there is a “a question of America’s welcomeness, a slowing U.S. economy and recent safety concerns.

“These challenges are real and demand decisive action,” the organization, whose members include large hotel groups, airlines and other major travel companies, said, adding that is “actively working with the White House and Congress to advance policies that drive economic expansion and keep the U.S. competitive on the global stage.”

There are billions of dollars on the line. People from the United States already travel abroad and spend more in other countries than the U.S. brings in from foreign travelers.

Last year, the United States’ travel deficit was more than $51 billion, meaning Americans spent that much more abroad than foreigners visiting the U.S. spent, stripping out spending for medical and educational purposes, which still showed a deficit, according to Commerce Department data.

The U.S. brought in more than 72 million visitors last year, still below pre-Covid levels, according to a report from Jefferies. Visitors from Canada were the largest group, accounting for 28%, followed by Mexico at 23%, the bank said in a note this month.

Travel and tourism of inbound visitors are counted as U.S. exports, and they accounted for about 8% of U.S. exports of goods and services, according to the Commerce Department.

International visitors from overseas are especially important because they tend to stay longer and spend more money than local tourists, according to the U.S. Travel Association.

Both air travel and land crossings between the United States and Canada are down.

In February, Canadians’ return flights to Canada fell 13% over last year while return trips by car dropped 23% according to Statistics Canada.

Hotel demand in some area along the Canada-U.S. border are also down. As of March 15, they were off 8% in Bellingham, Washington, and 3.5% in the Niagara Falls area, according to hotel data firm STR. However, demand throughout Florida, a top destination for Canadian travelers, is up 3% over last year, the firm said.

Canadian airlines are cutting some routes and flights to the U.S.

Canadian airline Flair, for example, said it canceled its planned Toronto to Nashville, Tennessee, route.

“Our network decisions are driven solely by consumer demand—we deploy our aircraft where demand is strongest to provide the lowest fares to the most travellers,” a spokeswoman for the airline said by email.

Canadian airline WestJet said it has seen Canadian customers shift bookings from the U.S. to other popular sunseeker destinations like Mexico and the Caribbean.

“The airline remains focused on knowing where people want to go, and we will continue to fly where there is demand,” a spokeswoman said.

The shift comes as travel executives have warned about weaker-than-expected bookings for domestic U.S. trips, meaning more local tourism might not be able to make up for the drop in trans-border travel. While U.S. household credit and debit card spending overall was up 1.5% over last year as of March 22, spending on airlines dropped 7.2%, according to a Bank of America report this week.

United Airlines CEO Scott Kirby, for example, said at an investor conference earlier this month that the carrier is trimming routes in part because it’s seeing “a lot of it trans-border, big drop in Canadian traffic to go into the U.S.,” as well as a sharp drop in flights that had previously catered to U.S. government-tied travel.

Lara Harbachian, who works for a digital printing company in Montreal, and eight friends (so far) had been considering several U.S. destinations this year to celebrate their 40th birthdays: San Diego; Palm Springs, Calif.; Savannah, Georgia; or Nashville. The winner was farther east: Barcelona, Spain.

While the flights to Europe were more expensive than the ones to the U.S. destinations, Harbachian said it will be cheaper for her and her friends to visit the popular Spanish city, where they won’t need to rent a car and high-end meals and hotels are cheaper, especially with a weaker Canadian dollar over the greenback.

“I can get a 15 euro meal but I can’t get a $15 meal” in the U.S., she said.

The White House didn’t immediately comment about the pullback in visitors.

Trump earlier this month created a task force for the 2026 FIFA World Cup that the U.S. is co-hosting with Mexico and Canada to “showcase the Nation’s pride and hospitality while promoting economic growth and tourism through sport.”

Another challenge for the U.S. travel industry this year is a growing number of travel warnings about the visiting the United States. So far, Germany, the United Kingdom, France, Denmark and Finland have issued travel warnings for their citizens who are planning to go to the United States.

Those were prompted by detentions even of individuals who had visas to be in the United States as well as Trump’s executive order that the country would only recognize two biological sexes, prompting concerns from governments in Europe about travelers whose passports state a different gender than the one they were born with.

For example, Germany said that “travelers with the gender entry “X” or whose current gender entry differs from their birth date should contact the responsible U.S. diplomatic mission in Germany before entering the country to find out about the applicable entry requirements.”

Travel warnings “could deter international visitors, especially first-time travelers,” said Carolin Lusby, assistant professor in tourism at the Chaplin School of Hospitality & Tourism Management at Florida International University.

She said there is often a rebound after an incident or tragedy occurs, such as after the Paris terror attacks in 2015. “But a lot of times is we know that once a destination image changes, it takes a lot of effort to bring back the trust,” she said.

“In terms of the economic consequences, that could turn into billions of lost dollars,” she added.