By Timothy Pena
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March 16, 2025
Foreign tourism generates multiple layers of economic benefits, categorized as primary, secondary, and tertiary profits. 1. Direct Contribution (Primary Profits): In 2023, the tourism sector's direct contribution to the U.S. Gross Domestic Product (GDP) reached $619.8 billion, accounting for 2.4% of the nation's GDP. These are the immediate earnings from tourist spending in core sectors: • Accommodation – Hotels, resorts, hostels, and rental properties. • Transportation – Airlines, car rentals, taxis, and public transit. • Food and Beverage – Restaurants, cafes, bars, and street vendors. • Attractions & Entertainment – Museums, theme parks, guided tours, and cultural sites. • Retail & Souvenirs – Shops selling local goods, crafts, and duty-free items. 2. Total Contribution (Including Indirect and Induced Revenues): When considering the broader economic impact, which includes indirect and induced contributions, the Travel & Tourism sector's total contribution to the U.S. GDP was $2.36 trillion in 2023. These profits arise from the supply chain supporting the tourism industry: • Supply & Service Providers – Businesses supplying hotels, restaurants, and tour companies (e.g., food suppliers, laundry services, security, and maintenance). • Construction & Infrastructure – Investments in roads, airports, hotels, and tourism-related facilities. • Marketing & Advertising – Companies promoting destinations through digital campaigns, travel agencies, and tour operators. • Local Agriculture & Manufacturing – Farmers and artisans benefiting from the demand for food, textiles, and crafts. 3. Tertiary Profits (Induced Revenue) These are long-term, economy-wide benefits driven by tourism growth: • Job Creation & Wage Growth – Increased employment in various sectors, improving local income levels. • Urban Development & Real Estate Growth – Demand for new hotels, resorts, and commercial spaces boosts property values. • Government Revenue – Taxes on tourism-related businesses, such as hotel occupancy taxes, airline fees, and sales tax. • Community Development – Tourism profits reinvested in public services, infrastructure, and cultural preservation. • Knowledge & Cultural Exchange – Exposure to different cultures, languages, and business practices that enhance local innovation and skills. 4. Employment Impact: The industry supported approximately 18 million jobs across the country, surpassing the previous record of 17.4 million. Each layer contributes to a more sustainable and dynamic economy, reinforcing tourism’s role as a key driver of development. 5. Canadian Boycott Impact The U.S. Travel Association estimates that a 10% reduction in Canadian travel could result in a $2.1 billion decrease in spending and the loss of approximately 14,000 American jobs. Recent data indicates a more pronounced downturn. In February 2025, the number of Canadians driving to the U.S. fell by 23% compared to the same month in the previous year. Additionally, major Canadian travel agencies have reported a 40% decrease in leisure bookings to U.S. destinations. 6. Conclusion Whatever the outcome of the tariff wars between the U.S. and the rest of the world, Tourism will also get more expensive and endearment for everything America has to offer foreign tourists will suffer. The U.S. typically earns over $200 billion annually from international visitors. If tariffs lead to fewer foreign tourists due to higher costs or strained diplomatic relations, the U.S. could lose billions in revenue each year. Printable pdf
