Canada's domestic tourism industry could net billions due to U.S. trade war: report
OTTAWA — Canada's tourism industry might be in for a boost as Canadians boycott the United States and spend their travel dollars closer to home this year.
In a report released May 29, the Conference Board of Canada estimates the net economic benefit for the domestic tourism sector could be as high as $8.8 billion.
The think tank said its April travel intentions survey suggests roughly 27 per cent of Canadian respondents are considering a trip to the U.S. in the next few years - down from more than 50 per cent in the same survey last November.
Statistics Canada data shows the number of Canadians returning to the country from the United States by car fell 35.2 per cent year-over-year in April - the fourth consecutive month of year-over-year declines.
"This shift is so unique. It's driven by political and economic conflict," said Kiefer Van Mulligen, senior economist at the Conference Board of Canada and the report's author.
Van Mulligen said that 2025 was shaping up to be a return to normal for much of the tourism sector after years of recovery following the COVID-19 pandemic.
But then came the tariff dispute — kicked off by the United States in early March after weeks of threats from President Donald Trump — and with it, a wave of "buy Canadian" sentiment north of the border.
While the Conference Board's travel intention survey shows an uptick in the number of Canadians saying they planned to travel abroad to destinations outside the United States, a larger share of those surveyed said they were shifting their holiday plans to domestic destinations.
The report predicts that a weaker Canadian dollar, dragged down by the tariff dispute, will also hold back U.S. travel plans.
Van Mulligen said that if Canadian travellers spend even a portion of the money they'd typically spend in the States on a lengthy overnight trip in Canada, the knock-on impact would add billions of dollars to the Canadian economy this year.
"We might actually see some people spending more than usual on a domestic trip, travelling farther, staying longer, things like that," he said.
"Even under more conservative assumptions, it seems like a net positive for tourism this year."
Fears of an economic slowdown tied to the tariff dispute could also encourage Canadians to rein in spending and opt for more affordable "staycations," Van Mulligen said.
An Ontario family might, for example, opt to drop a few hundred dollars on a week-long camping trip in Algonquin Park rather than spend a few thousand dollars at the Grand Canyon for a similar stay.
But if Canada faces a steep downturn due to the trade dispute, Van Mulligen said, travellers might dial back their spending altogether, mitigating the size of the overall bump for Canadian tourism.
Statistics Canada data also shows that Canada is seeing a drop in visits from American tourists — typically the country's largest source of in-bound travellers.
Van Mulligen said the Canadian response so far to U.S. trade aggression has been careful not to "alienate" American travellers.
"The rhetoric in the trade war has been aimed primarily at the administration and the policies," he said. "Hopefully, Americans still feel welcome."
The Tourism Industry Association of Canada warned in an open letter to Prime Minister Mark Carney dated May 16 that a "prolonged reduction of U.S. visitors could have detrimental effects."
"The rapid drop in American visitors in a number of markets is already threatening the viability of operators across the country and putting at risk the livelihoods of the more than (two) million Canadians employed in the sector," the letter read.
The group called for a boost in international marketing of Canada as a travel destination and measures to streamline entry for international visitors.
But Van Mulligen noted that Canada is not alone in feeling slighted by U.S. trade aggression.
He said Canada could also pick up some "slack" from overseas tourists alarmed by Trump's efforts to upend global trade and annex nations like Greenland.
This report by The Canadian Press was first published June 3, 2025.
Craig Lord, The Canadian Press
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Hill
16 minutes ago
- The Hill
Johnson brushes off Musk campaign spending threats: ‘It doesn't concern me'
House Speaker Mike Johnson (R-La.) in an interview Friday brushed off Elon Musk's campaign spending threats in light of the tech billionaire's public fallout with President Trump, suggesting he isn't worried. The spat between Trump and Musk began with the latter's criticism of the president's legislative agenda making its way through Congress. Johnson said he built a closer relationship with the then-special government employee and that the tech mogul has been led astray regarding the 'big beautiful' spending package. 'Look, it doesn't concern me. We're going to win either way because we're going to win on our policies we're delivering for hardworking Americans and fulfilling those promises,' Johnson told Fox News's 'Jesse Watters Primetime.' 'But look, I like Elon and respect him. I mean, we became friends in all this process,' he continued. 'I've been texting with him even this week … in trying to make sure that he has accurate information about the bill. I think he has been misled about it.' Musk, who contributed hundreds of millions of dollars to assist in Trump's win in the 2024 presidential election, was the biggest donor during the White House race. Amid his recent spat with Trump, which broke out in public as the two traded insults and threats, Musk argued that without his political expenditures, Trump would have lost to former Vice President Harris, Republicans would lose the majority in the House and the GOP would have failed to flip the majority in the Senate. Trump then threatened to have all federal contracts associated with the billionaire's companies to be cut off. As the fight between the two intensified, the tech executive floated the idea of forming a third party and accused the president of being named in the late Jeffrey Epstein's files. Trump has denied close ties to the disgraced financier. Musk's opposition to the GOP megabill — which he called a 'disgusting abomination' — is largely tied to deficit spending. The billionaire argued the legislation would balloon the national debt and fails to slash enough spending. The package faces an uphill battle in the Senate. While Musk, who recently left his position as the top adviser to Trump's Department of Government Efficiency (DOGE), seemed open to repairing ties on Friday, the president appeared to be OK with moving on. Johnson in the interview Friday defended the spending bill and commended Trump for his handling of the squabble. 'We're going to make good on this… I like the president's attitude. You know, he is moving on. He has to,' he told the host. 'He's laser-focused on delivering for the people. And House and Senate Republicans are as well. So, we've got our hand at the wheel.' 'We're going to get this done just like we told the people,' the Speaker continued. 'And if you are a hardworking American that is struggling to take care of your family, you are going to love this legislation.' The Louisiana Republican added, 'I'm telling you, all boats are going to rise and everybody's going to be in a much better mood before we go into that midterm election in 2026.'
Yahoo
16 minutes ago
- Yahoo
Morning Bid: Trump-Musk bust-up smolders
By Mike Dolan LONDON (Reuters) - What matters in U.S. and global markets today Donald Trump's hotly anticipated meetings with the leaders of the world's two other biggest economies ended up being sideshows compared to his online bust-up with billionaire backer Elon Musk. It's Friday, so today I'll provide a quick overview of what's happening in global markets and then offer you some weekend reading suggestions away from the headlines. Today's Market Minute * White House aides scheduled a call between Donald Trump and Elon Musk for Friday, Politico reported, after a huge public spat that saw threats fly over government contracts and ended with the world's richest man suggesting the U.S. president should be impeached. * U.S. President Donald Trump and Chinese leader Xi Jinping confronted weeks of brewing trade tensions and a battle over critical minerals in a rare leader-to-leader call on Thursday that left key issues to further talks. * China has signalled for more than 15 years that it was looking to weaponise areas of the global supply chain, a strategy modelled on longstanding American export controls Beijing views as aimed at stalling its rise. The scramble in recent weeks to secure export licences for rare earths shows China has devised a better, more precisely targeted weapon for the trade war. * By any measure, the recent resilience of U.S. stocks is remarkable, with Wall Street powering through numerous headwinds to erase all its tariff-fueled losses and move into positive territory for the year. Reuters columnist Jamie McGeever explains why the rally may still have some juice left in it. * There are some tentative early signs that weak thermal coal prices are starting to boost import demand among Asia's heavyweight buyers China and India. Read Reuters Columnist Clyde Russell to find out more. Trump-Musk bust-up smolders For markets trying to navigate everything from creeping signs of labor market weakness to the latest European Central Bank easing, the spat between the U.S. president and the world's richest man proved more than a distraction. It remains to be seen if it overshadows the May payrolls report later on Friday. The extraordinary sparring match drew in other major political and business figures and included potentially seismic accusations and threats. In turn, the share price of Musk's Tesla plummeted almost 20% at one point, dragging Wall Street stock indexes and crypto tokens deep into the red. The public feud appeared to cool off somewhat overnight and allowed stock futures to regain some lost ground. But the fact that the spat overshadowed the other major events of the day was another marker of this administration's unpredictability. The substance of the row was over Trump's "one big beautiful" fiscal bill that Musk thinks is a "disgusting abomination" due to the amount of spending. The bill, which has yet to be passed by the Senate, is expected to add $2.4 trillion to the U.S. debt over the next decade, based on CBO estimates. The vast bulk of this will likely be incurred over the next four years. In the background, the call between Trump and China's President Xi Jinping delivered no breakthroughs in the trade row apart from warmer words and an agreement to resume talks. The Oval Office meeting with Germany's Chancellor Friedrich Merz was relatively positive about trade and diplomatic issues. Earlier in the day, the ECB cut rates again as expected and suggested that there may be a pause at its next meeting and that it could be near the end of its easing cycle now that 'real' inflation-adjusted rates are back near zero. The euro hit a six-week high on Thursday regardless, although it gave back those daily gains today. Rising weekly U.S. jobless claims, meantime, cast a shadow over today's release of the May employment report. Consensus forecasts are for a slowdown in payroll growth to 130,000. Treasury yields, which ebbed and flowed all day on the conflicting signals from the trade meetings and stock gyrations, are back hovering at the week's lows ahead of the jobs report. Even though Federal Reserve officials continue to signal caution about the uncertain outlook ahead, markets are now priced for a resumption of Fed cuts by September. Into the already confusing mix, the Treasury released its annual report on potential currency manipulation overseas, adding Switzerland and Ireland to its watchlist, which already includes China, Japan, Germany, South Korea, Taiwan, Singapore and Vietnam. The list likely carries more heft than usual amid multiple tense trade negotiations. Markets assume the U.S. may pressure other countries to let their currencies appreciate versus the dollar as part of deals to avert severe tariffs being re-imposed next month. The Swiss National Bank responded on Friday by saying it would intervene in currency markets where necessary to keep inflation on track. Intervention to cap a super-strong franc has been a critical monetary tool used over the past decade and may need to be tapped again now that Swiss inflation has returned negative just as the SNB's key interest rate is set to return to zero in June. Elsewhere, China's yuan slipped against the dollar while falling to a near two-year low versus its major trading partners on Friday as the Trump-Xi call fell short of many expectations. Stock markets overseas were mixed on Friday as Wall Street remained on edge and the U.S. jobs report loomed. In the euro zone, first-quarter GDP was revised higher to show twice the growth originally estimated: 0.6% quarter-on-quarter, leading to an annual rate of 1.5%. India's central bank cut key rates by a larger-than-expected 50 basis points to 5.5%, its steepest cut in five years. It also slashed its cash reserve ratio - funds that banks are required to hold - by 100 bps to 3% in a surprise move aimed at boosting lending and speeding up policy transmission. In single stocks, Tesla shares recovered around 5% in Frankfurt on Friday, having closed down 14% in New York yesterday amid the Trump-Musk spat. It lost about $150 billion in market value yesterday, which caused the erstwhile member of the 'Magnificent Seven' megacaps to drop to ninth in the list of most-valuable firms behind Broadcom and Berkshire Hathaway. Broadcom's shares, however, fell 4% in extended trading overnight as its forecast-beating earnings seemed to underwhelm the Street. In Bank of America's weekly tally of fund flows, U.S. stocks saw outflows of $7.5 billion, the third week of exits, while European shares saw inflows of $2.6 billion, the eighth week of inflows. Weekend reading suggestions * 'BLUE BONDS': European countries should seize the moment to boost the size and liquidity of jointly-issued euro sovereign debt, and a solution could be to replace a proportion of the stock of national bonds with senior Eurobonds, or 'blue bonds'. So says a 'working document' from Peterson Institute senior fellow and former IMF chief economist Olivier Blanchard in a paper jointly written with Citadel's Angel Ubide. * NUCLEAR BLIND SPOTS: United Nations nuclear watchdogs appear to have lost track of some critical elements of Iran's nuclear activities since U.S. President Donald Trump ditched a 2015 deal that imposed strict restrictions and close supervision by the International Atomic Energy Agency. Reuters Francois Murphy and John Irish report on key blind spots that include not knowing how many centrifuges Iran possesses or where the machines and their parts are produced and stored. * OCEAN ECONOMY: Trade in the global 'ocean economy' hit as much as $2.2 trillion in 2023, about 7% of total world trade, but this trade is increasingly threatened by climate change and environmental problems, the United Nations trade and development arm UNCTAD showed in a report this week. The ocean economy grew faster than the world economy at large in the five years to 2020 and an estimated 100 million jobs depend on it. * 'TRUMP DOCTRINE': The emerging foreign policy under President Donald Trump resembles a 'look the other way' doctrine or a 'none of our business' doctrine, argues former George W. Bush State Department official Richard Haass on Project Syndicate. "The U.S. sought to change the world, annoying some and inspiring others. Those days are gone, in some ways for better, but mostly for worse. The US has changed. It is coming to resemble many of the countries and governments it once criticized." * MAGNETIC FEW: A small team in China's Ministry of Commerce decides the fate of the global auto industry, one rare earth magnet export permit at a time. China holds a near-monopoly on rare earth magnets, a key component in electric vehicle motors, and it added them to an export control list in April as part of its trade war with the United States. Reuters' Laurie Chen and Lewis Jackson show how it falls to the Bureau of Industrial Security and Import and Export Control, part of China's Ministry of Commerce, to review export permits for the rare earth magnets, vital for car motors, wind turbines and even U.S. F-35 fighter jets. * FINANCE AND AI: Artificial intelligence advances in the financial sector offer enhanced data analysis, risk management and capital allocation, but there are problems too, according to a paper on CEPR's VoxEU website. As AI systems become more widespread, they introduce challenges for regulators tasked with balancing the benefits of innovation with the need for financial stability, market integrity, consumer protection and fair competition. * DRONE ATTACK: Ukraine's 'Operation Spider's Web' last weekend used smuggled drones to attack bomber aircraft deep inside Russia, and the 'remarkable event' could affect the future of conflict, argues Council on Foreign Relations fellow Michael Horowitz. The attack "clearly shows that even targets deep in a country's territory could now be at risk". * IMF EUROPE: The case for closer European economic integration has become more compelling as external challenges multiply, according to Alfred Kammer, director of the International Monetary Fund's European Department. Stressing the need for the completion of the single market, Kammer said capital markets integration has been too slow and that cross-border flows have been frustrated by persistent fragmentation. "If history is a guide, Europe can turn adversity to advantage." * ALPINE TRUSTS: Liechtenstein is examining tightening control of scores of Russian-linked trusts abandoned by their managers under pressure from Washington. Reuters' John O'Donnell and Oliver Hirt cite sources in reporting that the country, one of the world's smallest and richest, is home to thousands of low-tax trusts, hundreds with links to Russians. Chart of the day Supply chain stress ticked up in May, data from the Federal Reserve Bank of New York said on Thursday. The bank noted that its Global Supply Chain Pressure Index for May rose to 0.19 from -0.28 in April, only the second time it stood in positive territory this year and the highest reading since the 0.20 seen in August of last year. Although the index remains subdued compared to the post-pandemic surge, growing concerns about the impact of the tariff war - particularly the impact of China's restrictions on rare earth and minerals exports on the global auto industry - will ensure policymakers keep a close eye on these pressures for any signs of re-emerging inflation. Today's events to watch * U.S. May employment report (8:30 AM EDT), April consumer credit (3:00 PM EDT); Canada May employment report (8:30 AM EDT) Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias. (By Mike Dolan; Editing by Anna Szymanski)
Hamilton Spectator
18 minutes ago
- Hamilton Spectator
Bank of Canada head Tiff Macklem says mandate should evolve in a ‘shock-prone' world
OTTAWA - Tiff Macklem is wearing an Edmonton Oilers pin as he reflects on coming very close to beating big odds. It's a significant day for the governor of the Bank of Canada: he's just laid out his reasons to the entire country and a global audience for keeping the central bank's benchmark interest rate steady for a second straight time. That night is also Game 1 of the NHL's Stanley Cup finals; Macklem ends his press conference with a hearty 'Go Oilers!' It's a rematch from last year's heartbreak, when the Oilers came oh-so-close to mounting a seemingly impossible four-game comeback against the Florida Panthers, only to fall short by a single goal in Game 7. Macklem, too, was almost safe to declare victory last year. He had just about secured a coveted 'soft landing' for Canada's economy — a rare feat that sees restrictive monetary policy bring down surging levels of inflation without tipping the economy into a prolonged downturn. 'We got inflation down. We didn't cause a recession,' Macklem said in an interview with The Canadian Press after the rate announcement Wednesday. 'And, to be frank, until President (Donald) Trump started threatening the economy with new tariffs, we were actually seeing growth pick up.' Fresh out of one crisis, the central bank now must contend with another in U.S. tariffs. Five years into his tenure as head of the Bank of Canada, Macklem said he sees the central bank's role in stickhandling the economy — as well as Canada's role on the world stage — evolving. Many Canadians have become more familiar with the Bank of Canada in recent years. After the COVID-19 pandemic recovery ignited inflation, the central bank's rapid tightening cycle and subsequent rate cuts were top-line news for anxious Canadians stressed about rising prices and borrowing costs. That was all in pursuit of meeting the central bank's inflation target of two per cent, part of a mandate from the federal government that's up for review next year. Macklem said the past few years have led the Bank of Canada to scrutinize some of its metrics, like core inflation and how it responds to supply shocks in the economy. But he defends keeping the bank's inflation target, particularly at a time of global upheaval. 'Our flexible inflation targeting framework has just been through the biggest test it's ever had in the 30 years since we announced the inflation target,' he said. 'I'm not going to pretend it's been an easy few years for anybody. But I think the framework has performed well.' Macklem said, however, that he sees room to build out the mandate to address other areas of concern from Canadians, such as housing affordability. Whether it's the high cost of rent or a mortgage, or surging prices for groceries and vehicles, Macklem said the past few years have been eye-opening to Canadians who weren't around the last time inflation hit double digits in the 1980s. 'Unfortunately, a whole new generation of Canadians now know what inflation feels like, and they didn't like it one bit,' he said. Monetary policy itself can't make homes more affordable, he noted — in a nutshell, high interest rates make mortgages more expensive while low rates can push up the price of housing itself because they stoke demand. But Macklem said one of the things he's reflecting on is that inflation can get worse when the economy isn't operating at its potential or when it's facing great disruption. 'There is a role for monetary policy to smooth out some of that adjustment — support the economy while ensuring that inflation is well-controlled.' He didn't offer suggestions on how the mandate might expand to address housing affordability specifically, but said 'the work is ongoing' and will be settled in meetings with the federal government next year. Right now, he's trying to make sure that the economic impacts from Canada's tariff dispute with the United States don't result in prolonged inflation. The Bank of Canada is not alone in debating how monetary policy ought to respond in what Macklem called a more 'shock-prone' world. The G7 Finance Ministers' Summit in Kananaskis, Alta., last month also featured roundtables with the bloc's central bankers. Conversations at the summit were 'candid,' Macklem said, and though the nations issued a joint statement at the close of the event, that doesn't mean they agreed on everything. 'International co-operation, to be honest, has never been easy. It is particularly difficult right now, but that doesn't make it less important. That makes it more important,' he said. 'I do think Canada, as the chair of the G7, has a leadership role to play.' The Bank of Canada is also changing the way it has conversations with Canadians and the kind of data it considers. A day after the June interest rate decision, deputy governor Sharon Kozicki told a Toronto business crowd how the central bank is using data more nimbly, relying heavily on surveys and more granular information to make monetary policy decisions in an uncertain time. These sources offer a faster way to see what's happening on the ground in the economy than traditional statistical models allow. Macklem said the central bank would previously have dismissed most supply shocks as transitory — likely to pass without the need for central bank adjustments, such as rising and falling oil prices. But he said the Bank of Canada needs to be running a more 'nuanced playbook' now to respond to some increasingly common shocks: supply chain disruptions, trade conflicts and extreme weather to name a few. An overheating economy running up against a supply disruption is the kind of inflationary fire Macklem is trying to avoid in this latest crisis. 'The economy does not work well when inflation is high,' he said. 'And the primary role of the Bank of Canada is to ensure that Canadians maintain confidence in price stability. That's all we can do for the Canadian economy. That's what we can do for Canadians. And that's what we're focused on.' Later in the day on Wednesday, the Edmonton Oilers took Game 1 of the Stanley Cup finals. The Canadian team was down but roared back to win 4-3 in overtime. It's still early in the Bank of Canada's response to the latest global shock. But with any luck, Macklem's team might also get a leg up with lessons learned the last time they faced big odds. This report by The Canadian Press was first published June 7, 2025.
