Travel execs: Trump trade deal will bring more US tourism
Congressional passage of the United States-Mexico-Canada Agreement (USMCA) trade agreement would be welcome news to the travel and tourism industry.
Most people are surprised to hear that travel and tourism is one of America’s largest exports. The concept is simple enough: Every dollar spent by an international visitor to the United States on lodging, entertainment, food and other travel-related services counts as an export and reduces our trade deficit by one dollar.
Last year, international travel to America generated $256 billion in US exports, making travel and tourism the nation’s second-largest export and accounting for 10% of all US exports. In fact, travel was responsible for a $70 billion trade surplus. Without travel, America’s overall trade deficit would have been 11% higher.
The North American Free Trade Agreement (NAFTA) was good for the travel industry, but research shows the USMCA could potentially be even better. Based on figures from the International Trade Commission, U.S. Travel economists estimate the USMCA would raise $1.7 billion in travel-generated economic output and create 15,000 jobs.
Those benefits are driven by two factors: an increase in domestic travel resulting from stronger US economic growth that accompanies greater trade; and second, by an increase in international visitors and the spending they generate at American businesses.
The United States has in recent years seen a slowdown in travel from Canada and Mexico. Arrivals and spending from Canada are down significantly since peaking in 2013. This should raise concerns in both the White House and Congress, since without travel exports America’s $3.6 billion overall trade surplus with Canada in 2017 would have been a $9.3 billion deficit. Mexico, meanwhile, saw a sharp 6.1% decline in visitors to the United States in 2017 after seven consecutive years of growth, before rebounding slightly last year.
There is strong evidence elsewhere that trade and travel are closely linked. Amid trade tensions with China, visitors from that country were down an alarming 5.5% in the first 10 months of 2019 after more than doubling over the previous decade. That’s a huge blow to America’s economy, especially considering that the average Chinese visitor to the United States spends far more than the typical overseas traveler.
While increasing exports of American-made tractors, airplanes and other manufactured goods is critical, there has never been a better time to capitalize on the proven potential of travel to close our trade deficit. The world is in the midst of an international travel boom, with a record 1.4 billion people traveling abroad last year, and 4.8% annual growth predicted through 2023. But the forecast for US inbound travel growth is half that (2.4%). Our policymaking should be aggressively seeking to close that gap.
Lower tariffs mean greater exports for American manufacturers, farmers and the travel industry. Stronger trade with key trading partners in Canada and Mexico will generate faster US economic growth and job creation. The good that the USMCA will do ought to transcend politics. Congress should pass it as soon as possible.