As the trade war with China is poised to escalate this Sunday, September 1 as tariffs increase again, one industry has been feeling the effects for a long time that is tourism.Across the United States, the decline in Chinese tourists has been palpable for the past year.
In Hawaii, the number of Chinese tourists dropped by more than 23% in the first four months of 2019, compared to the same time period last year. In Arizona, incoming Chinese tourists declined by 3.7% in 2018 after quadrupling from 2010 to 2017.
For the past 15 years, Chinese tourism to the United States has grown steadily, thanks to a stronger Chinese economy as well as ameliorated relations between the countries. Faced with a rapid decline of inbound tourists, many American cities and tour operators are scrambling as Chinese visitors were large spenders.
For the United States – a country whose tourism accounts for 2.8 percent of gross domestic product – these small declines represent a lot of money. Looking broadly at the sector, expenditures by international visitors in the US exceeded $251 billion in 2017; the country ranks third in the world in terms of total visitation.
Nationwide, the number of Chinese visitors fell in 2018 by 5.7% according to the National Travel and Tourism Office.Is declining Chinese tourism a product of the trade war?
A number of factors are said to influence this decline. Firstly, since Chinese tourism to the U.S. was expanding so much, many say the growth was bound to level off at some point. Other economists point to the strong U.S dollar, which disincentivizes tourists from other countries.
However, as the countries’ trade war has escalated, China’s government asked state firms to avoid travel to the U.S. There are also reports that Chinese tourism to the US is actively being discouraged by their government.
The drop in Chinese visitors has a big effect on the American economy as they are biggest spenders of all international travelers, accounting for $36.4 billion last year. Chinese tourists spend an average of $6,700 per trip. That’s about 50% more than the average international traveler to the U.S.