U.S. Tariffs Expected to Significantly Impact Canadian Tourism Industry

by Marsha Mowers January 27, 2025

The new US tariffs expected on February 1st would significantly impact the travel industry, alongside major markets and consumers, according to a recent Corporate Traveller Canada survey.

The ripple effect of imposed tariffs could significantly impact North American airlines, domestic and cross-border hospitality and tourism offerings as small businesses are responsible for a large portion of those bookings.

Conducted by YouGov, the survey finds 85% of small businesses will reduce cross-border travel for business if tariffs or trade restrictions are imposed, resulting in wide implications for Canada’s economy and, more broadly, the tourism and hospitality industry.

“The conversations around potential US tariffs and trade restrictions often focus on rising costs, but their impact on business relationships and cross-border travel is just as critical,” says Chris Lynes, Managing Director of Flight Centre Travel Group, including global travel management company Corporate Traveller.

“Our survey shows Canadian SMEs are not only cutting back on US travel but also exploring new markets. While these shifts could reshape the landscape of North American business short term, the Canada-US partnership remains strong and will endure.”

Small and medium-size enterprises (SMEs) make up 98% of all businesses and nearly 90% of the private workforce in Canada. 85% of SMEs anticipate reducing cross-border travel to the US, and 77% of SMEs are exploring alternative international markets. 65% of Canadian SME workers are concerned about the potential impact of US tariffs or restrictions.

Among Canadian SMEs with US operations or clients, 44% report increasing cross-border travel due to trade policy uncertainty, while 40% have reduced such travel.

“As Canada’s businesses anticipate disruptions, many are already preparing by pivoting to global opportunities outside the US. This is not just a response to tariffs; it’s an opportunity for growth and diversification,” adds Lynes.