Foreign tourists scared away as US ‘puts up closed sign'
The United States is expected to lose $12.5 billion in international travel spending by the end of the year, according to a report.
Analysts said foreign holidaymakers felt discouraged from visiting America, the most powerful travel economy in the world, because of the heated political climate.
Reports of tourists being stopped at the border, visa detentions, a tariff war waged by the Trump administration and a higher exchange rate were factors in a decline in spending by international travellers, said the World Travel and Tourism Council (WTTC).
It estimated that foreign tourists would spend $169 billion on holidays to the US this year, down 7 per cent from $181 billion last year and 22 per cent from the peak before the pandemic.
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LONDON, June 12 - A proposed U.S. tax targeting foreign investors could hurt European energy giants that operate in America's booming oil and gas sector, undermining what President Donald Trump describes as his energy dominance agenda. Trump's sweeping tax and spending bill under review by the Senate includes an additional tax of up to 20% on foreign investors' income, such as dividends and royalties. The tax, known as Section 899, was devised as a pushback against countries that impose what the bill describes as "unfair foreign taxes" on U.S. companies, such as digital services taxes. Section 899 is believed to be targeting companies headquartered in the European Union and Britain, which both have tax systems considered discriminatory by the Trump administration. The provision is a significant threat to London-listed Shell (SHEL.L), opens new tab and BP (BP.L), opens new tab as well as France's TotalEnergies ( opens new tab and Spain's Repsol ( opens new tab, which all have sprawling operations in the United States. Trump, who often used the slogan "drill, baby, drill" in his election campaign, has portrayed himself as pro-fossil fuel, vowing on his first day in office to maximise oil and gas production. But if approved, Section 899 could have the opposite effect. BP last year invested more than $6 billion, about 40% of its capital expenditure, in the United States, where its interests include onshore and offshore oil and gas operations, two refineries, thousands of retail fuel stations and a power trading business. The country is also home to more than a third of BP's global workforce of about 90,000 and accounted for roughly 30% of its 2024 revenue of $189 billion and more than a quarter of its $21 billion net profit. Shell, the biggest European oil major, is also a huge investor in the United States, which accounted for 23% of its 2024 revenue of $284 billion. It invests about 30% of its capital expenditure in the country, where it has oil and gas production facilities, a petrochemicals plant, a vast retail network, liquefied natural gas (LNG) purchasing agreements and major trading operations. The United States became increasingly important to Big Oil companies in recent decades thanks to its stable fiscal and regulatory environment while other regions presented a variety of challenges. Take Russia, for example. Its vast oil and gas resources started attracting investments from many companies in the 1990s after the collapse of the Soviet Union, but the country is now uninvestible owing to western sanctions that followed Russia's invasion of Ukraine in 2022. Similarly, western companies have limited opportunities to invest in the Middle East, where national oil companies dominate. Europe, meanwhile, has limited natural resources and strict environmental regulation. The multinational nature of oil and gas companies means they have plenty of experience dealing with tax uncertainty, but shifting tax policies tend to delay investments. Company boards require long-term confidence to proceed with large, multi-decade capital projects such as oil and gas fields or LNG plants. The industry's confidence in the United States was already shaken under Trump's predecessor, Joe Biden, who in 2020 revoked a construction permit for the Keystone XL pipeline. The Biden administration also paused approvals for new LNG projects in 2024 because of climate concerns. Trump lifted the pause when he entered the White House. According to Section 899, multinational companies could face a new tax on dividends sent overseas and inter-company loans, potentially reducing profit. The Gulf of Mexico accounted for about 10% of Shell's 2024 free cash flow of $40 billion, it said in a presentation. That means that Section 899 could shave $800 million from its free cash flow per year from Gulf of Mexico operations alone. BP made about $1.5 billion in free cash flow in the United States last year, Reuters calculations show. A 20% dividend tax could translate into a $300 million loss in free cash flow. Faced with the worsening fiscal terms, companies could opt to direct funds away from the United States. Though options for deploying capital elsewhere on a similar scale are limited, companies could choose to spread their investments more widely. Such a scenario could be a boon for countries such as Canada, Brazil, Mozambique and Namibia, which have large untapped natural resources. Another option would be for companies to transfer their headquarters and listings to the United States - a costly and politically complicated option. Shell previously contemplated such a move to boost its share value, though it appears to have abandoned the idea. Ultimately, it is very likely that the Senate would push to modify Section 899 or limit its scope, given the potential far-reaching impact on many sectors. But barring a radical change, Section 899 poses a huge risk for European oil and gas giants that are heavily dependent on the United States. Achieving the Trump administration's energy dominance agenda will almost certainly require more foreign investment, not less, so if the CEOs of European energy companies complain loudly enough, the president may well listen to them. The opinions expressed here are those of the author, a columnist for Reuters Enjoying this column? Check out Reuters Open Interest (ROI), opens new tab, your essential new source for global financial commentary. ROI delivers thought-provoking, data-driven analysis. Markets are moving faster than ever. ROI, opens new tab can help you keep up. 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