US President Donald Trump breaks the mould of a world leader in so many ways, and now it appears we can add scaring off tourists to the list.
So much ink has been spilled over the last month speculating about the impact that Trump’s bizarre and erratic collection of tariffs will have on the global economy, forecasts made exceedingly more difficult to conjure amidst the constant chopping and changing by the White House.
While Australian Travel Industry Association CEO Dean Long was quick to assure the local market that Australia’s 10% tariff applied to commercial goods and not the flow of people over the US border, one could feel the collective tension as travel businesses waited to see what knock-on effects the flurry of taxes would have on their bottom lines.
Our sister title Travel Daily reported on the rising tension at the US border for example, specifically reports that arrivals were being treated more harshly, with some even kicked out because of alleged expressions of anti-American sentiment on their smart devices.
While it appears these experiences represent a small minority of cases, it has lamentably been difficult to obtain any concrete reassurances from the country itself.
I have reached out to Brand USA several times over the last month or so to get their take on whether this was an unfair perception, but the body declined to comment.
Given Monday’s bombshell development that five members of the Brand USA board were reportedly fired by email on the direct orders of the White House, I don’t expect that media black out to change anytime soon.
So, our newsroom has wrestled with the idea of reality versus perception in recent weeks; perhaps the downturn in US travel sentiment has been exaggerated, fuelled by the storm of media reports about border crackdowns and economic volatility?
But then came the first major material evidence this week that Australia would unlikely be immune to the fallout produced by Trump’s turbulent policies, with Flight Centre Travel Group (FCTG) downgrading its underlying profit forecast for 2025, citing changes to the United States’ trade and entry policies as major factors.
FCTG now anticipates its profit to be between $300-335 million, down from an original forecast of between $365-405 million.
“Changes to American entry policies and tariffs have contributed to lower-than expected TTV growth across all core brands, and as a result, super overrides, margins, and overall leverage have been impacted,” the company conceded.
Among the levers pulled by FCTG to combat the predicted shortfall are a range of cost-cutting measures, which will include losing some full-time staff in non-customer facing areas, trimming capex by 15-20% for the full year 2026, and possibly even scrapping non-core brands, to name just a few.
So, there you have it, perhaps this is more parts reality than perception.
To find out more, I recently took some of my fears to David Beirman, an Adjunct Fellow Management and Tourism University of Technology Sydney.
Thankfully, the tourism guru managed to allay some of my more apocalyptic concerns and explained there could even be a silver lining to the unfolding chaos caused by Trump’s tariffs.
“While there is likely to be a short-medium term decline in global travel to the USA – including Australia – FCTG will benefit from significant upward demand in the Asia-Pacific region,” Beirman suggested.
“The superb marketing and promotion of Asian destinations including Japan, China, Indonesia, Philippines, Thailand, Malaysia, South Korea have emphasised the value proposition of travelling to Asia Pacific destinations and Australian travellers are responding positively to this.”
While US holiday plans could well be exchanged for closer-to-home Asian markets, those still in the hunt for North American experiences could also be convinced to switch to Canada, Beirman said.
“While most prospective travellers to the USA don’t base their decision to visit on the occupant of the White House, if there is a perception – accurate or otherwise – that international visitors are unwelcome to the USA, then travellers will go elsewhere.
“Canada is likely to be a beneficiary of that.”
That suggestion brought back distant memories for me when I was reporting during the first ‘Trump Slump’, with one Destination Canada leader unhappy with my suggestion that the country could see the boycotting of the US as a benefit.
I was told in no uncertain terms not to even mention Trump’s name in the piece, but I digress.
Beirman also stressed that economic and border policies alone are unlikely to be the sole drivers of any Aussie decline in travel to the US.
“The Australian market has been affected by exchange rates which make the US an expensive destination, and this has been a longer-term trend,” he noted.
“Australia remains a significant market. While the Trump Administration has not really made it more difficult for travellers to enter the US than in the past, instances of travellers experiencing difficulties are attracting more publicity than usual as part of the political, economic and perceptual odium towards the USA in response to US economic and foreign policy shifts.”
Complex Travel Group Director Mark Trim also told travelBulletin that it is hard to equate how much impact the US situation is having on travel sentiment because it is also at a time that is traditionally a bit slower.
“It’s definitely having an impact and there is some noise there,” Trim said.
“A few people are changing plans to Canada or removing the US from their trips, however a lot of people go on holiday in April and extend around the public holidays, which can put off decision-making while they are away.
“Couple that with the upcoming federal election, something that always dents confidence for a six- to eight-week period, and you just have a bit of a market lull which I would suggest is around a 15-20% impact.
“We’d expect some of that to come back from mid-May once the election is decided, and if the trade war uncertainty clears up, things should settle.
“We still expect a very strong FY25/26 in the medium- to long-term,” Trim added.
While commentary from the experts certainly provides some solace that the US market will continue to be viable, I have been struck by the deluge of news stories from within the travel ecosystem pointing to an uncertain financial future.
For example, just this week American Airlines opted to pull its financial guidance over uncertainty in the market caused by US trade policies.
Admittedly, some of the slide in passenger demand was also driven the fatal midair collision of American Eagle Flight 5342 earlier this year, AA said.
There is also the swathe of businesses expressing concern about attending events in the US for fear of being detained, deported or persecuted at the border.
For example, Global Mobility and Immigration experts Vialto Partners told me that they are hearing a lot of worry from corporations who would normally send people in and out of the States but are now less sure in light of what they believe are unpredictable border processes not governed by judicial process.
“We are advising clients to think carefully about their corporate population and the need to travel in the USA,” said Head of the Immigration Practice Stacey Tsui.
“They need to look carefully at their people and the risk factors.
“Is there anything in their background, their nationality, their travel history and even their social commentary that could cause a problem for them at the border? And if there is, they should reconsider their travel. Can someone with a less risky profile attend the meeting or conference? Or can it be conducted online or outside of the USA?” Tsui added.
For inbound stakeholders, there could be a break in the clouds though, with Tsui predicting that some American companies may consider sending their staff to Australia for conferences and meetings instead.
One solution could also be the introduction of dedicated intra-corporate visa, which allow companies to bring highly skilled and specialised workers into Australia for dedicated short-term projects, Tsui added.
While many in the industry continue to debate whether the health of the US as a travel market is being dented by superficial media narratives, or if it will be materially sustained for years to come, it’s clear to me that Trump’s impulsive behaviour and predilection for punitive foreign policy responses may ferment a self-fulfilling prophecy either way.
In the battle of perception versus reality in a confusing online information landscape, perception often tends to win.
