Published: Mar 3, 2017 11:27 a.m. ET
Foreign travelers spend about $250 billion a year, but they’re beginning to shun the land of the fearful
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If Donald Trump is going to take credit for juicing the stock market with his promises of laissez-faire polices, he’s going to have to take some of the blame for the increase in fear and suspicion that’s making America an increasingly uncomfortable place for foreigners — especially people of color — to live or just to visit.
The travel industry is abuzz with talk of a “Trump Slump” that could cost billons of dollars and cut a half of a percentage point off U.S. growth rates.
Trump likes to say that he loves foreigners (he even married a few!). He says he’s just protecting the borders from “bad hombres” who sneak in and steal our jobs. It’s nothing personal. He’s no bigot. It’s not racism; it’s just smart economic policy to preserve jobs for Americans.
And Trump is just trying to keep us safe.
And Trump is just trying to keep us safe.
Everyone wants to be safe, but the cost of being suspicious and fearful of foreigners may be too high, there is an economic cost as the hard-won reputation of the United States as the land of opportunity, freedom and hope takes a hit.
Fear may be ruining America’s biggest export industry — travel and tourism. (Tourism is considered an export because Americans receive payment for goods and services purchased by foreigners. The location of the transaction doesn’t change that fundamental relationship. Americans spending money abroad is counted as an import, of course.)
The travel industry had nearly $250 billion in sales to foreigners in 2015 and had a $98 billion trade surplus, the most of any sector. Without travel, the U.S. trade deficit would be about 20% larger, $600 billion instead of $500 billion.
According to Oxford Economics, foreign travel to the United States could drop by 6.3 million, or about 8%. The total impact of anti-foreigner policies and sentiment could knock 0.5 percentage points off U.S. gross domestic product, Oxford said.
| America’s biggest exports | 2015 exports | Balance of payments |
| Travel and tourism | $246 billion | $98 billion |
| Machinery | $205 billion | -$31 billion |
| Motor vehicles & parts | $152 billion | -$198 billion |
| Professional, management services | $135 billion | $35 billion |
| Electronic equipment | $132 billion | -$101 billion |
| Food and feeds | $128 billion | -$1 billion |
| Energy goods | $125 billion | -$89 billion |
| Intellectual property services | $125 billion | $85 billion |
| Airplanes & parts | $120 billion | $64 billion |
| Chemicals (excluding drugs) | $111 billion | $38 billion |
| Consumer durables (excluding autos) | $106 billion | -$209 billion |
| Financial services | $102 billion | $77 billion |
We’ve all heard the horror stories, about the lives ruined by the incompetent, illegal, immoral and unnecessary ban on entry into the U.S. by citizens and natives of seven mostly Muslim countries. It didn’t make us safer at all, but there was a huge cost.
We’ve read about the aggressive policing by the Customs and Border Patrol: the passengers on a domestic flight from San Francisco to New York who were ordered by Customs to produce their identity papers before being allow off; the son of America’s most famous Muslim who was asked “what kind of name is Mohammed Ali Jr., anyway?”; the children’s book author from Australia who was harassed at the border; the Egyptian-born French citizen who was nearly deported before he could deliver a scholarly paper on the dangers of collaboration with fascists; and the NASA scientist who was forced to reveal his passwords for his phone. The stories go on and on.
We’ve heard the government claim to have the unrestricted right to seize the electronic devices of anyone entering the country and demand passwords so it can look at our private photos, emails, text messages, social media, and all our private business.
We’ve heard the government claim to have the unrestricted right to seize the electronic devices of anyone entering the country and demand passwords so it can look at our private photos, emails, text messages, social media, and all our private business.
We’ve read about the aggressive policing by the Immigration and Customs Enforcement: the agents who prowl the misdemeanor courts looking for brown faces, the roadblocks near the southern border, the fear of deportation that grips anyone (documented or not) who could be suspected of being a foreigner.
We’ve heard about the hate crimes, the vandalism, the violence against “others.” We read about the engineers in suburban Kansas City who were gunned down while sitting a bar, allegedly by a racist shouting at them to “Go back to your own country.” And the accused guman didn’t even know what country that was, nor did he care. He just shot them.
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Trump Pledges to ‘Project American Power’
In a speech on the aircraft carrier USS Gerald R. Ford, President Trump stuck to military themes, and reiterated his pledge to increase the military budget to $603 billion. Photo: AP.
Of course, stuff like this happened under Barack Obama’s watch too, but Obama wasn’t actively condoning it, like Trump has. (Kudos to the White House for the belated but welcome condemnation of the Kansas City shootings and other hate crimes. Let’s hope he keeps it up.)
No one suggests the border should be wide open, but we should also be aware that every extra level of security imposes a cost. After the Sept. 11, 2001, terror attacks, we tightened up security at the airports, and made flying a major hassle.
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Everyone knows by now that the long security lines, the rules about liquids and shoes, and the humiliating TSA pat-downs weren’t designed to make us feel safer, but to make us feel more afraid. It worked.
The airlines suffered a lost decade of profits and the economy took a hit, as billions of dollars that could have been spent on something useful were diverted instead to dubious security measures.
International travel returned to pre-2001 levels only in 2016, just in time for the “Trump Slump.” The travel press is reporting that bookings for international flights for travelers coming from outside the U.S. are down significantly from a year ago, and not just from the seven nations in the original ban.
Trump is making flying into the United States a major hassle, even for American citizens, permanent residents, and the citizens of our closest allies. The response from abroad is predictable.
The agency that boosts tourism for New York City says the city should expect 300,000 fewer foreign tourists this year at a cost of $600 million. Before Trump’s election, the city expected 400,000 more. The city is the top U.S. destination for foreign tourists.
The U.S. Travel Association pleaded with Trump on Thursday to throw out the welcome mat to foreigners, saying that the Muslim ban in particular has “had a broad chilling effect on demand for international travel to the United States.”
The Australian author who’s been to America more than 100 times says she’ll never come back. The father of one of the victims of the Kansas City shooting appealed “to all the parents in India not to send their children to the U.S. in the present circumstances.” How many of the tens of thousands of Indians who work in the tech industry will heed his call?
If a significant number of foreigners agree that a visit to America isn’t worth it, it would be a big deal for the U.S. economy.
The scientific community depends on a relatively free movement of ideas and people. So does the education system, where a growing share of enrollment in universities is from students coming from abroad and paying list-price tuition. The U.S. tech industry is utterly dependent upon foreigners, not only for workers, but for ideas and entrepreneurship. Many of Silicon Valley’s best-known names were founded by immigrants (Google, Apple, Intel, Tesla, Uber, Yahoo, eBay, etc.), and more than half of recent startups were started by immigrants.
Not to mention the impact on the travel industry itself, which, as I mentioned before, is the biggest export industry in America, with about $246 billion in sales to foreigners, more than machinery, airplanes, autos, semiconductors, soybeans or Hollywood.
| Where do the travelers come from? | 2015 spending |
| China | $30.2 billion |
| Canada | $22.7 billion |
| Mexico | $19.7 billion |
| Japan | $17.2 billion |
| U.K. | $16.2 billion |
| Brazil | $14.4 billion |
| India | $11.8 billion |
| Australia | $9.3 billion |
| Germany | $8.9 billion |
| Korea | $8.1 billion |
Trump is obsessed with the U.S. trade deficit. In his mind, this one number describes how terrible our economic policy has been. When Trump talks about the deficit, he almost always ignores the positive contribution of services, such as tourism and travel. One third of U.S. exports are services; it’s the most successful part of the economy. That’s a big blind spot in his understanding of the economy — and a surprising one given that his most successful businesses have been in hotels, casinos and resorts.
What is the country that spends the most on travel to America? Why, it’s China, the same country that we have our biggest trade deficit with! Those Chinese visitors leave $30 billion in our pockets, $25 billion more than we spend visiting their country, and take away their impressions of what kind of country and what kind of people we are. That used to be a great deal for America.
But now, I wonder if we’ll still be seen as a beacon of hope, or as just another paranoid police state that puts fear over freedom.
