US trade war would trigger Trump slump, warns WTM report

A trade war caused by President Donald Trump pulling out of international agreements would hit the US travel industry, reveals Euromonitor International research for World Travel Market London – the leading global event for the travel industry – released today (Tuesday 7 November) at WTM London.

If Trump pulls out of the North American Free Trade Agreement (NAFTA) – as he has threatened to do – then travel between the US and Mexico would drop significantly, and US-Canada travel would dip slightly, claims the Top 100 City Destinations Ranking report.

“If the US drops out of NAFTA and imposes a 35% tariff on Mexican imports, followed by Mexican retaliation, the impact on -regional travel would be considerable,” reveals the research

It estimates trips from the US to Mexico would fall by more than 8% between 2017 and 2020, while travel in the opposite direction, Mexico to the US, would tumble by 18.5%.

Travel between the US and Canada would also fall but by a smaller margin of about 1.5%.

Regardless of trade wars, the election of Trump last year has already had a considerable impact on the American travel industry.

New visa restrictions for six mainly Muslim countries and a temporary ban on laptops for some flights are key factors which have hit the US inbound market. A third iteration of the US travel ban was issued in September 2017 includes restrictions on Venezuela and North Korea.

The number of international travellers to the US fell by 4% in the first quarter of 2017 to 15.8 million – with the Middle East source markets showing some of the sharpest declines.

UK visits fell 15.5% to about 774,800 and the number of Japanese travellers dropped 2.1% to 884,900. Total European visitor numbers dropped by 10% to 2.6 million.

“The US dominates the Top 100 ranking among cities in the Americas, but with Donald Trump in the White House, future performance is unsure,” says author Wouter Geerts, Senior Travel Analyst at Euromonitor International..

“Although still seeing positive growth, US arrivals witnessed a slowdown in 2016 due to a strong dollar and political uncertainty surrounding the US elections.

“Since the arrival of President Trump in the White House, there has been much uncertainty about what is to come next.”

The report highlights how one of Trump’s first decisions in office was to pull out of the Trans-Pacific Partnership (TPP) in January 2017.

“Donald Trump entered office on the back of claims that he would close the US border, build a wall between Mexico and the US, and end trade agreements – all potentially impacting the travel industry,” says the report.

The report assesses the performance of 100 cities around the world, and notes that seven of the 10 Americas cities in the Top 100 are in the US.

However, in the wake of Trump’s policy changes, it is expected that the 2017 performance of these cities will fall behind those in Canada and Latin America.

“New York City is the clear leader in the Americas. To many, it might seem that the city is untouched by what is happening in Washington DC, but NYC & Co has revised its forecasts for 2017, expecting a potential fall of 300,000 visitors, although this is likely to be a worst-case scenario,” adds the report.

One further effect on travel is Trump’s order to implement biometric scanners at airports more quickly, as part of his policy to tighten border controls.

He demanded a stronger focus on “biometric exit”, which collects data such as face scans, fingerprints and eye scans when travellers leave the country, making it easier to check who overstayed their visa, track terrorism suspects and get accurate immigration data.

However, facial recognition is also seen as a solution to congestion in airports.

Delta is testing facial recognition scanners at its check-in kiosks, and the airline hopes this will improve efficiency and reduce waiting times.

WTM London, Senior Director, Simon Press said: “Last year’s WTM London coincided with the presidential election, and there was a great deal of uncertainty about what a Trump presidency would mean. Businesses do not like uncertainty.

“We’ve seen the laptop bans and restrictions on mainly Muslim countries – and now our report flags up further concerns about the possible impact of a trade war in the Americas.

“As the report says, uncertainty reigns with Donald Trump in the White House.

eTN is a media partner for WTM.