U.S. Trade War Represents an $8.8 Billion Potential Gain for Canadian Tourism

President Donald Trump’s administration has put Canada–U.S. relations on edge, and Canadians are finding ways to support local industry as much as possible. The U.S. government’s whipsaw tariff announcements have focused on goods, leaving services trade between Canada and the U.S. largely ignored. However, services are one spot where Canadians can hit back. In 2023, despite a $108.6 billion goods trade surplus with the United States, Canada had a services deficit of $13.8 billion.

Travel is one of the main areas where Canadians support the U.S. economy much more than Americans support Canada. To put the value in context, in 2023, Canadians spent $26.6 billion on tourism in the U.S. compared to the $12.9 billion Americans spent in Canada.

If Canadians were to transfer all their U.S. travel dollars to Canada, this would be the upside impact on domestic tourism. In reality, the figure will be much lower. Canadians will still travel to the U.S. for personal and business reasons. Weak business and consumer confidence will also reduce travel spending more broadly, as travel is often discretionary. On net, we still estimate that travel spending in Canada, by Canadians, could increase by up to $10.3 billion this year stemming from this shift in travel preferences. This figure falls to $8.8 billion once the impacts of reduced American travel to Canada is included.

Trends Favour Domestic Travel this Year

Two opposing forces will drive Canadian domestic tourism spending this year. The first is the weak economy. All else being equal, weaker consumer confidence usually translates into weaker travel spending. The second is how Canadians will change their international travel spending patterns. The weak Canadian dollar and recent aggressive stance from the U.S. towards Canada has led to a shift in Canadians’ intentions to travel and spend in the United States.

Consumer sentiment, a leading indicator for travel spending, is very weak. In March, The Conference Board of Canada’s Index of Consumer Confidence reached a record low, falling below its previous nadir set during the global pandemic. Canadians are concerned about their labour market prospects in the year ahead and generally don’t believe that now is a good time to make major purchases. Under these circumstances, many Canadians will be cautious with discretionary spending.

Meanwhile, heightened scrutiny while crossing the border into the United States, as well as a new registration requirement for Canadians staying more than 30 days, will discourage Canadian travel to the United States. Along with many European countries, Canada has updated its travel advisories for the U.S. after several instances of prospective entrants to the U.S. being arbitrarily detained or turned away for social media posts.¹

As well, the weak Canadian dollar will deter many Canadians from visiting the U.S. Previous research has found that Canadian border crossing volume falls when the Canadian dollar depreciates and this effect becomes more pronounced when the dollar is particularly weak.² The dollar remains around 72 cents, which is low compared to long-term historical averages, but is similar to where it was last year, and above lows at the start of this year.

This confluence of circumstances has already started to keep Canadians away from the United States. In April, the number of Canadians returning from the U.S. by car and air declined by 18.7 compared to the same month in 2024.³ This trend is likely to continue.

The Conference Board of Canada’s Travel Intentions Survey is another indicator showing a shift in behaviour. The survey asks Canadians how likely they are to take an overnight leisure trip to the United States at some time in the next few years. In our April 2025 survey, the share of respondents either very likely or somewhat likely to take a U.S. trip in the next few years fell to 27.1 per cent from 53.2 per cent in our November 2024 survey . This decline is apparent across Canadians in all income brackets. (See Chart 1). On the other hand, most provinces are reporting increased interest from Canadian tourists.⁴

Chart 1

Canadians less likely to take an overnight leisure trip to the U.S.

(percentage share of survey respondents, by income bracket)

Source: The Conference Board of Canada.

How Much Canadians Spend in the U.S.

In 2023, Canadians spent $26.6 billion while visiting the U.S.—more than in all other countries combined. Adjusting for prices, and assuming no growth in real travel spending,⁵ this would translate into approximately $27.7 billion in 2025. Most of this spending happened during trips made for leisure (67.3 per cent) or business (13.4 per cent) purposes. If this travel spending were redirected domestically, this would be an upper bound on the amount we could expect Canada’s tourism sector to benefit. Several caveats apply, however.

Canadians typically spend more per trip when travelling internationally than when travelling domestically. Even as Canadians shift to domestic trips, they will be unlikely to spend as lavishly on these vacations, although there is likely to be a shift in the type of domestic trips being made towards longer and higher cost trips compared to historical norms. Tariffs, weaker near-term economic growth, and a highly uncertain outlook will limit discretionary spending.

As well, many Canadians will continue to visit the U.S. For example, given the close historical ties between the U.S. and Canada, citizens in both countries maintain links with family and friends across the border. These social visits to friends and relatives will likely continue to a greater degree than leisure and business visits. On balance, however, Canadians are travelling to the U.S. less frequently, which provides an opportunity for Canada’s tourism industry.

What Could the Economic Benefit Be?

Using data from our Travel Intentions Survey, arrival and expenditure figures, and The Conference Board of Canada’s national economic forecast, the impact of these travel shifts can be quantified. Between April 2023 and 2025, the share of Canadians’ intending to take their longest overnight summer trip in the United States fell from 14.6 per cent to 6.5 per cent. This would imply a $15.4 billion shift in travel spending away from the U.S. in 2025.

However, this total will not necessarily be spent in Canada. Some Canadians avoiding the U.S. will still travel abroad. In April, Canadians returning by air from non-U.S. destinations increased by 9.9 per cent versus 2024. In our April 2025 Travel Intentions Survey, the share of Canadians intending to spend their longest overnight summer trip overseas also increased, which could be interpreted as capturing 22.5 per cent of travel that may have otherwise been bound for the United States. Spending on these overseas trips could account for $3.5 billion of total spending displaced from the United States.

Considering the economic turbulence taking place, many Canadians will not take an overnight trip and will either save or spend their discretionary dollars on non-tourism goods and services this year. Based on the decrease in Canadians’ overall travel intentions between April 2023 and April 2025, this loss may absorb approximately $1.6 billion of the potential total. Some of these funds will be spent in Canada, though not necessarily on tourism.

Based on these survey-backed assumptions, the additional potential tourism spending pool available to Canada’s domestic tourism industry will amount to approximately $10.3 billion. (See Chart 2). The actual share of this total that will be spent on domestic tourism could be more modest, however, as Canadians have historically spent less on an average domestic trip compared to a trip to the United States. Yet, more Canadians will take their longest overnight summer trip within Canada, boosting domestic tourism spending more than what historical averages of spending per trip would suggest.

Chart 2

Substantial share of displaced spending could benefit domestic tourism

($ billions)

Source: The Conference Board of Canada.

American Tourists are Still Welcome

This extra spending by Canadians could be offset by weaker inbound tourism from the United States. Although Canadian officials have been diligent in aiming trade war rhetoric toward the U.S. administration and not its people, American tourists may not feel welcome in Canada as the relationship between the two countries has deteriorated. In April 2025, land arrivals by U.S. residents to Canada fell by 10.7 per cent year-over-year while air arrivals fell by 5.5 per cent. The economic turbulence in store for the U.S. economy (which contracted in the first quarter of 2025) will also dampen inbound tourism spending.

Given that Canadians are avoiding travel more than the other way around, and that Canadians also spend twice as much in the U.S. as Americans do here, the net benefit will be positive for Canada. If the annual decline in U.S. arrivals to Canada averages the drop in same-day and overnight travel reported in April, this would account for approximately $1.5 billion in lost U.S. spending. This would leave a net benefit to Canadian tourism as large as $8.8 billion. Remaining welcoming to prospective U.S. visitors will be important to maintaining visitor flows from Canada’s largest international tourism source market and maximizing the benefits of the shift in Canadian travel intentions.

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1. Julie Watson, “Detentions of European tourists at U.S. borders spark fears of travelling to America,” The Globe and Mail, March 22, 2025.
2. Ambarish Chandra, Keith Head, and Mariano Tappata, “The Economics of Cross-Border Travel,” The Review of Economics and Statistics 96, no. 4 (2014): 651, doi:10.1162/REST_a_00404.
3. Statistics Canada, “Leading indicator of international arrivals to Canada, March 2025,” May 6, 2025.
4. Alexandra Mae-Jones, “The staycation goes Canada-wide: Scrapped U.S. trips could be a domestic boon,” CBC News, March 13, 2025.
5. In 2024, Canadian return arrivals from overnight trips in the U.S. (by land and air) fell by 4.7 per cent (year-over-year). Return arrivals from same-day trips rose by 11.6 per cent; however, overnight trips drive most of Canadians’ spending in the United States.

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