Monday, July 28, 2025
The tourism sector in the US has witnessed a roller-coaster reboot over the last few years, shaped significantly by political and economic changes. One of the key disruptions occurred during former President Donald Trump’s tenure, where his aggressive tariff policies resulted in a slump in the tourism industry, especially from Europe. The slump of tariffs on a variety of goods, particularly within the EU, caused negative sentiment among European travelers, who, as a result, chose to divert their vacation plans away from the U.S. However, with the recent announcements of a new trade framework between the U.S. and the European Union, including a new 15% tariff rate, there is a significant opportunity for the U.S. to reboot its tourism sector, especially as the effects of these tariffs are expected to ease. This shift in trade policy, which is being hailed as a “new economic tier up,” could provide the necessary push to rejuvenate the country’s once thriving tourism industry. This article explores how the U.S. tourism sector has been impacted by Trump’s tariffs, the resulting slump in European travel, and how the new trade agreement with the EU holds the potential to kick-start the tourism revival.
The Trump Tariffs: A Disruption to U.S. Tourism
In 2018, the U.S. embarked on a path of economic protectionism under President Trump’s administration, which had far-reaching consequences, including for the tourism sector. Trump imposed a series of tariffs, particularly on goods coming from Europe and China, triggering trade wars and retaliatory measures that would set the tone for the next few years. These tariffs, though aimed at protecting U.S. manufacturing and encouraging domestic production, inadvertently created a negative sentiment among international travelers, particularly in Europe.
As part of the tariff strategy, the Trump administration enforced a baseline 10% to 15% tariff on a range of goods from the European Union, including automobiles, semiconductors, and pharmaceuticals, but crucially, products related to tourism. These tariffs led to a decrease in the competitiveness of U.S. products abroad, creating a perception of an unfriendly environment towards foreign consumers and businesses. For European travelers, the message was clear: the U.S. was becoming a less welcoming destination due to these punitive measures.
As of July 28, 2025, the US tourism industry is still facing significant challenges, with international visitor spending projected to drop by $12.5 billion this year, marking a 22.5% decline compared to previous peaks. The downturn has been especially severe among European travelers, with a 17% decrease in inbound tourism from Europe in March 2025, and a notable 23% drop in Canadian visits to the U.S. in February. This decline is attributed to factors such as the imposition of tariffs, stricter immigration policies, and a perceived unwelcoming environment. For instance, the introduction of a 25% tariff on automobiles in March 2025 led to retaliatory measures, further straining relations with neighboring countries. However, there are signs of potential recovery, particularly following the recent trade agreement between the U.S. and the European Union, which includes a baseline tariff rate of 15% on EU goods. European officials have expressed cautious optimism about the deal, suggesting that the 15% tariff is manageable, especially if it is not added to previous duties. While the U.S. tourism sector continues to face obstacles, these new trade developments offer hope for a revival, with the potential to restore international confidence and stimulate tourism revenue in the coming months.
The immediate effect on the tourism industry was marked. European travelers, who historically constituted one of the largest groups of international visitors to the U.S., began to reconsider their travel plans. Higher travel costs, the uncertainty of a rapidly changing tariff environment, and the perception of economic instability dampened their interest in traveling to the U.S. In particular, the imposition of tariffs on essential goods, such as alcohol, wine, and luxury products, disrupted consumer spending and left travelers seeking more stable, affordable destinations elsewhere.
The resulting tourism slump was noticeable. According to reports, European visitor numbers to the U.S. dropped significantly during the tariff era. Countries like Italy, France, and Germany — some of the largest contributors to U.S. tourism — began to experience declines in the number of outbound travelers to the U.S. In 2019, for example, visits from Europe to the U.S. saw a drop of nearly 3%, with several major tourism hubs like New York and Los Angeles seeing fewer international visitors. This shift represented a significant downturn in the country’s tourism receipts, which had been a lucrative industry for the U.S. for decades.
Tariff-Driven Negative Sentiment Among European Travelers
One of the most impactful consequences of Trump’s tariffs on the tourism industry was the resulting negative sentiment among European travelers. While the tariffs themselves primarily affected goods, the broader perception of economic friction between the U.S. and Europe caused many to reevaluate their travel decisions. The economic uncertainty surrounding U.S. trade policies, particularly tariffs, created a chilling effect on travel plans.
The psychological impact of tariffs, particularly when they affected well-loved items such as wine, spirits, and luxury goods, led to a sense of economic alienation. The tariffs, combined with rising prices and fewer favorable trade terms, made traveling to the U.S. less appealing. The once-popular U.S. destinations that had long attracted European tourists, such as the Statue of Liberty in New York or Disneyland in California, began to feel less accessible. Higher airfare costs and expensive products due to tariffs only exacerbated this sense of alienation.
Furthermore, Europe, as a major partner in global tourism, found itself responding to the U.S. tariffs with retaliatory measures of its own. The EU imposed tariffs on American goods, including motorcycles, bourbon, and peanuts, which escalated tensions and led to trade barriers that discouraged cross-Atlantic tourism. Europeans, affected by these tariffs, often chose to visit alternative destinations in Asia, Latin America, or other parts of Europe itself, where travel was more affordable and politically neutral.
The Resulting Slump in U.S. Tourism
As a result of the tariffs and the negative sentiment generated by Trump’s trade policies, U.S. tourism from Europe experienced a prolonged slump. According to industry statistics, European arrivals to the U.S. dropped year on year, particularly as the tariffs were introduced and escalated. The economic repercussions were felt in major U.S. cities that had historically relied on European tourists for a significant portion of their tourism revenue.
Cities such as New York, Los Angeles, and Miami, which had once seen throngs of European tourists visiting cultural attractions, shopping centers, and restaurants, reported declines in international foot traffic. Even beyond European travelers, the broader negative perception of the U.S. as a tourist destination began to gain traction in global markets.
Tourism-related industries, including hospitality, transportation, and retail, also began to feel the impact. Hotels, airlines, and restaurants, which had catered to European travelers, reported losses in bookings and sales. This created a ripple effect across the entire U.S. economy, leading to job losses and reduced revenues for many businesses dependent on foreign tourism.
A New Trade Deal: The U.S.-EU Framework
However, in a significant shift, a new trade agreement between the U.S. and the European Union emerged as a beacon of hope for the tourism sector. In a meeting held on Sunday, July 27, 2025, U.S. President Donald Trump and European Commission President Ursula von der Leyen announced the framework of a new U.S.-EU trade deal. Under the deal, the baseline tariff rate would be set at 15% on EU goods imported into the U.S.
President Trump hailed the deal as “the biggest of them all,” emphasizing the economic benefits it would bring to both sides. Ursula von der Leyen, on the other hand, acknowledged that while the 15% tariff rate was significant, it was the best possible outcome given the circumstances. The agreement promised to bring stability to the U.S.-EU trade relationship, potentially reversing the damage done to the tourism sector by previous tariffs.
Notably, the deal also included provisions that would benefit sectors directly tied to tourism, such as airlines, luxury goods, and food and beverage products. The commitment to reducing tariffs on key travel-related products, such as wines, spirits, and high-end consumer goods, was seen as a win for the tourism industry. These provisions could make U.S. destinations more appealing to European tourists who had been deterred by the higher costs of traveling to the U.S.
Rebooting the U.S. Tourism Industry
The new trade agreement with the European Union represents a fresh opportunity for the U.S. to reboot its tourism industry. The 15% baseline tariff rate is a step in the right direction, reducing costs for European travelers and alleviating the burden of increased prices that had dissuaded many from visiting the U.S. In particular, the removal of tariffs on items such as wine, spirits, and luxury goods, which had previously been affected by Trump’s tariff policies, should help restore Europe’s interest in visiting U.S. destinations.
Additionally, the trade deal promises stability and predictability, two critical factors for travelers when planning international trips. As tariffs decrease and trade tensions ease, European tourists will likely feel more confident in booking trips to the U.S., knowing that travel costs will not be subject to sudden, unpredictable changes. With this renewed confidence, U.S. tourism destinations can begin to welcome back European visitors, who were once a cornerstone of the U.S. tourism economy.
Beyond Europe, the broader economic impact of the trade agreement will likely spill over into other regions, creating a more favorable environment for global tourism. As the U.S. secures more favorable trade terms with countries like China and Japan, the overall sentiment towards U.S. tourism will improve. This could lead to an increase in the number of international visitors from across the globe, further boosting the recovery of the U.S. tourism sector.
A Shift in the Global Tourism Landscape
The U.S.-EU trade agreement marks a critical turning point in the global tourism landscape. For the first time in several years, the U.S. is positioned to regain its status as one of the world’s most attractive travel destinations. The economic barriers that had previously hampered the flow of international tourists, particularly from Europe, are being dismantled, and a new era of trade relations is beginning to take shape.
This shift is expected to bring significant benefits not only to the U.S. tourism sector but also to other industries that rely on international visitors. From airlines to hotels to retail outlets, businesses across the U.S. that cater to foreign travelers will likely see an uptick in activity as tourism levels rise again.
Looking Ahead: A Bright Future for U.S. Tourism
In conclusion, the new trade agreement between the U.S. and the European Union provides a glimmer of hope for the U.S. tourism sector, which has been reeling from the effects of Trump’s tariff policies. With the easing of tariffs and the promise of a more stable economic environment, European travelers are expected to return to the U.S., bringing with them a renewed sense of optimism and interest in American destinations. The deal represents not just a win for trade, but also a critical step in rebooting one of the U.S.’s most valuable industries: tourism. The future looks promising as the tourism sector begins its recovery, buoyed by the positive changes in U.S. trade relations and the economic stability they promise to bring.
