The trade war against China has affected numerous industries, American and Chinese alike. While the automotive and retail industries have taken the hardest hits, there is another field that is facing unexpected consequences because of tariffs: Tourism.
Every year, around 3 million people visit the United States every year. Chinese tourism in the U.S. is a $60 billion industry. And this industry is likely to suffer if the trade war persists. According to the U.S. State Department, visa approvals for Chinese tourists has dropped by 13 percent since last year. That’s a total of 102,000 fewer visitors from China.
In addition, airline bookings from China to the U.S. have also decreased significantly. For example, the first week of October, which normally sees increased outbound trips from China, saw a 42 percent drop. The average Chinese tourist spends about $6,900 per trip— much-needed revenue for many American businesses.
American tourism industry must prepare financially
Soon, President Trump will meet with Chinese President Xi Jinping. This meeting may improve relations and end the trade war. However, if it does not, then China may restrict its tourism even more in an attempt to strong-arm the U.S. into dropping tariffs. However, this could alienate millions of middle-class Chinese citizens—an unlikely move from the Chinese government.
Cities like Los Angeles, San Francisco and New York, for example, are particularly popular tourist destinations. Businesses in this area may experience the impact of the tourism drop. It is crucial that business owners and investors prepare for the potential financial ramifications. Many companies choose to cut costs, seek financial or legal counsel or audit their business systems.