U.S. travel industry worries travel ban could echo post 9-11 period

U.S. travel industry worries travel ban could echo post 9-11 period

WASHINGTON — President Donald Trump’s executive order suspending immigration from seven majority-Muslim countries could slow the U.S. economy by hampering two of the nation’s top export industries: Tourism and higher education.

Trump’s immigration order followed his order to build a wall along the border with Mexico and his vow to rip up NAFTA. Combined, those moves could discourage visitors and students from many countries – not just the seven covered by the order – economists say.

They also reflect Trump’s shift toward an “America First” approach and away from the pro-globalization policies embraced by his predecessors. His combative trade stance potentially could open the door for China and other economic powers to fill a void.

“Broad-brush policies like this people barrier impede growth and certainly do not accelerate it,” David Kotok, chief investment officer at Cumberland Advisors, wrote in an email. “Trump has now set back the positive elements of global exchange in both goods and services.”

Foreign tourists provide critical support to the U.S. economy. In 2015, they spent roughly $199 billion on items ranging from hotel rooms and restaurant meals to plane tickets and amusement parks. That spending counts as exports. Travel and tourism made up nearly 9 per cent of U.S. exports that year.

Some economists say they worry that Trump’s order could create an echo of the post-9-11 period, when travel to the United States plunged, in part because of much tighter security. In the 10 years that followed – a period the travel industry recalls ruefully as the “lost decade” – the U.S. share of overseas travel fell by nearly one-third, according to the Council on Foreign Relations. That cost the U.S. economy $500 billion.

“The message got around the world that the United States was an unfriendly country to visit – that it’s a big hassle to visit there,” said Edward Alden, a senior fellow at the Council and author of “The Closing of the American Border,” a book about U.S. security after 9-11.

Given the disruptions at U.S. airports caused by Trump’s immigration order, which were widely covered by television news around the world, “it’s that story all over again,” Alden said.

Proceeds from tourism and education help narrow the nation’s trade deficit, a frequent target of Trump’s criticism on the campaign trail. Travel and tourism exports exceed overseas sales of autos and auto parts, which totalled $152 billion in 2015. Agricultural exports amounted to $137 billion.

Yet Trump’s orders “couldn’t happen at a worse time,” said Adam Sacks, president of Tourism Economics. Even before Trump’s executive orders, a strong dollar had made it costlier for foreign travellers to visit the United States.

And weaker economies in many countries, from China to European nations, have begun to slow the flow of tourists to the United States. Sacks estimates that travel and tourism spending barely grew last year from 2015’s record level.

“The P.R. optics on this are terrible,” Sacks said.

Trump’s immigration order and belligerent rhetoric about a wall along the Mexican border add up to “a series of immigration and trade policies that are all conveying to the world that we’re not interested in visitors coming to the U.S.,” Sacks said.

Laura Mandala runs a company in Alexandria, Virginia, that does market research for clients in the travel industry, including the Marriott hotel chain and state travel bureaus. Many of her clients spent less on her services in the years that immediately followed 9-11. Now, she fears a repeat.

“It’s the uncertainty,” Mandala said. “When something dramatic happens, they put a freeze on spending until they can figure out what the environment will be like.”