Long a bright spot, the industry is poised to post a trade deficit for the first time this century

The travel and tourism industry, which accounts for about 3% of the U.S. GDP, has long been one of the economy’s most robust sectors, particularly when it comes to trade: The U.S. had posted a trade surplus in travel every year this century. Until this year.

A drop in foreign visitors to the U.S. caused the real value of exports of travel services to fall at a 7.8% annual rate in the first quarter, according to the GDP report released Wednesday. The U.S. Travel Association says the United States is now running an annual travel trade deficit of $50 billion, compared with a $3.5 billion surplus in 2022.

“This presumably reflects increased hostility by many foreigners to the U.S., as well as fear of harassment by ICE officers,” Dean Baker, senior economist for the Center for Economic and Policy Research, wrote in his note reviewing the first quarter GDP numbers. “We will likely see further declines in future quarters, especially among students coming to study in the United States.”