Trump Tariffs & Tourism: US Job Losses from Canada Visit Decline

The economic fallout from the second Trump administration’s trade policies extends beyond tariffs and disrupted supply chains. A surprising consequence, detailed in recent research, is a measurable decline in local U.S. Employment tied to a sharp drop in Canadian tourism. The shift, triggered by escalating trade tensions and rhetoric surrounding potential U.S. Acquisition of Canada, highlights a previously overlooked vulnerability in tourism-dependent communities and underscores how geopolitical factors can swiftly impact local labor markets.

A 25% Drop in Visits, A Ripple Effect

President Trump’s aggressive trade stance in 2025 led to a 25% decrease in visits to the U.S. By Canadian residents, according to a recent study by Kurmann, Lalé, and Martin (2026). Even as the broader economic effects of the tariffs have been widely discussed – impacting goods trade and supply chains, as noted by Clausing (2025), Kawasaki (2025), and Amiti et al. (2026) – the impact on tourism, and specifically the resulting job losses in certain U.S. Communities, is only now coming into focus. Tourism typically supports around 10 million U.S. Jobs and contributes roughly 3% to the nation’s GDP (US Department of Commerce, 2026). Canadians historically represent a significant portion of international visitors, accounting for approximately 28% of the 72 million who visited in 2024.

The decline echoes previous instances where geopolitical conflicts have demonstrably deterred tourism, impacting host economies (Ahn et al., 2022; Greaney and Kiyota, 2025). However, the speed and concentration of the impact in this case are particularly noteworthy.

Granular Data Reveals Localized Impact

Researchers leveraged two novel datasets to pinpoint the effects of the tourism decline. The first, from Advan, provides smartphone foot-traffic data, allowing them to identify Canadian visitors at over 8 million points of interest across the U.S. The second, from Homebase, offers real-time establishment-level data on employment, hours worked, and wages for over 150,000 small and medium-sized businesses, primarily in the food service, retail, and leisure sectors. This combination allowed for a highly granular assessment of exposure to Canadian tourism, down to the ZIP code level.

Analysis reveals that exposure to Canadian tourism is highest in border regions stretching from Washington state to Maine, as well as popular tourist destinations in California, Florida, and Nevada (Kurmann et al., 2026). While the percentage of foot traffic from Canadian visitors is relatively small in most areas, some border communities rely heavily on Canadian customers, with some exceeding 10% of their total customer base.

Employment Losses Concentrated in Exposed Markets

The study found significant employment losses in areas highly exposed to Canadian tourism. Comparing establishments with high Canadian visitor exposure (roughly 1% or more of total foot traffic) to less exposed establishments, researchers observed a divergence beginning in spring 2025. Employment in the most exposed markets began to fall relative to less exposed areas, deepening through the summer and persisting through the end of the year. By mid-2025, establishments in the most exposed markets employed approximately 6% fewer workers compared to their less exposed counterparts. Interestingly, the adjustment occurred primarily through job losses, with no significant impact on average hours or hourly wages, aligning with patterns observed in other demand shocks affecting service industries (Goolsbee et al., 2025; Kurmann et al., 2025).

Estimating the National Cost: 14,000 to 42,000 Jobs

Scaling these establishment-level estimates to a national level yields a range of 14,000 to 42,000 jobs lost in exposed U.S. Markets. This estimate is conservative, focusing on the small and medium-sized businesses covered by Homebase and excluding potential demand spillover effects onto non-exposed businesses. The wide range reflects varying assumptions about which markets are considered exposed and the timeframe considered for the full impact of the decline.

While these numbers may seem modest in relation to overall U.S. Employment, their geographic concentration is substantial. The most affected areas encompass only 1,500 to 3,300 ZIP codes, representing 9 to 26 million residents. Within these communities, the estimated contraction of 4% to 6% in retail and leisure-sector employment at small establishments represents a significant local shock.

Beyond Direct Effects: Spillovers and Political Geography

The study acknowledges that the true employment losses are likely higher due to several factors. It doesn’t account for demand spillover effects onto neighboring businesses, doesn’t track larger establishments like hotels, and cannot fully capture business closures. Existing research suggests that tourism generates significant local economic gains through broader demand spillovers (Faber and Gaubert, 2019; Allen et al., 2020), implying that the indirect effects of the Canadian tourism decline could be substantial.

The political geography of the impact is also noteworthy. ZIP codes most exposed to Canadian tourism were disproportionately likely to have voted Democratic in the 2024 presidential election and tend to have somewhat lower household incomes. This contrasts with the pattern observed during the U.S.-China trade war, where tariff retaliation primarily affected Republican-leaning counties (Fetzer and Schwarz, 2019).

A Broader Lesson: The Hidden Costs of Geopolitical Tension

The U.S.-Canada case illustrates a frequently overlooked consequence of trade policy: the potential for geopolitical tensions to deter foreign visitors and rapidly impact local economies. These shocks disproportionately affect specific locations and non-tradable sectors, which may struggle to absorb the blow. While major tourist destinations like Las Vegas or Miami might offset the decline by attracting more domestic visitors, smaller communities along the U.S.-Canada border have limited capacity to do so.

The researchers also highlight the value of combining smartphone-based visitor data with high-frequency payroll records for rapid, granular assessments of tourism disruptions – providing insights well before traditional government statistics grow available. This methodology offers a template for analyzing future shocks, whether stemming from geopolitical tensions, public health crises, or macroeconomic downturns.

Looking Ahead: The long-term effects of the Canadian tourism decline remain to be seen. Continued trade tensions or a prolonged period of strained relations between the U.S. And Canada could further exacerbate the situation. Monitoring employment trends in exposed communities and assessing the effectiveness of any potential mitigation strategies will be crucial in the coming months. The situation also underscores the need for policymakers to consider the broader economic consequences of trade policies, beyond the direct impacts on goods trade and supply chains.

References

Ahn, J, T M Greaney, and K Kiyota (2022), “Political conflict and angry consumers: Evaluating the regional impacts of a consumer boycott on travel services trade”, Journal of the Japanese and International Economies 65: 101216.

Allen, T, S Fuchs, S Ganapati, A Graziano, R Madera, and J Montoriol-Garriga (2020), “Is tourism good for locals? Evidence from Barcelona”, Dartmouth College, mimeograph.

Amiti, M, C Flanagan, S Heise, and D E Weinstein (2026), “Who is paying for the 2025 US tariffs?”, Liberty Street Economics, Federal Reserve Bank of Novel York, 12 February.

Clausing, K (2025), “The aftermath of tariffs”, VoxEU.org, 29 August.

Faber, B, and C Gaubert (2019), “Tourism and economic development: Evidence from Mexico’s coastline”, American Economic Review 109(6): 2245–93.

Fetzer, T, and C Schwarz (2019), “Tariffs and politics: Evidence from Trump’s trade wars”, VoxEU.org, 23 April.

Gensler, G, S Johnson, U Panizza, and B Weder di Mauro (2025), “The second Trump administration: Consequences for the ‘rest of us’”, VoxEU.org, 8 December.

Goolsbee, A, C Syverson, R Goldgof, and J Tatarka (2025), “The curious surge of productivity in US restaurants”, NBER Working Paper 33555.

Greaney, T M, and K Kiyota (2025), “Regional impacts of international tourism boycott: A China – Japan conflict”, Economic Inquiry, first published 3 December.

Kawasaki, K (2025), “Economic impact of US tariff hikes: Significance of trade diversion effects”, VoxEU.org, 15 September.

Kurmann, A, E Lalé, and L Ta (2025), “Measuring small business dynamics and employment with private-sector real-time data”, Journal of Public Economics 250: 105477.

Kurmann, A, E Lalé, and J Martin (2026), “When neighbors stop knocking: The impact of Canada’s 2025 tourism decline on US local businesses”, CEPR Discussion Paper 21187.

Moder, I, and T Spital (2026), “The risk of tariffs as a tool to attract manufacturing investment”, VoxEU.org, 8 January.

US Department of Commerce (2026), “US travel and tourism fast facts”, International Trade Administration, National Travel and Tourism Office.