Canada-U.S. trade tensions impact travel industry

Trade tensions and tariff disputes between Canada and the United States are creating uncertainty for the travel industry. Following failed trade talks, Canadian travelers are increasingly redirecting their leisure spending away from the U.S. toward destinations such as Mexico, the Caribbean, Europe, Japan, and Southeast Asia.

Data from Flight Centre Travel Group indicates that U.S. leisure bookings made from January through August 2026 are down 7.4 percent year-over-year. While some recovery was noted in July compared to a weak 2025, bookings remained 39 percent below July 2024 levels. Conversely, business travel appears more resilient, with Corporate Traveller Canada reporting a 4.8 percent increase in cross-border air bookings year-to-date through July.

In the United States, tourism-dependent communities are concerned that retaliatory tariffs could stall fragile recoveries. For example, Kalispell, Montana, which saw a 38 percent drop in Canadian visitors in 2025, experienced a 16.1 percent increase in July 2026, but officials fear political rhetoric and trade disputes may reverse this trend. Statistics Canada reported a 10.6 percent year-over-year decline in outbound trips to the U.S. by Canadians during the first quarter of 2026.