Tourism to the U.S.
Means More Growth,
More Jobs, Lower Trade Deficit
Stephen Moore
Why does tourism matter to the U.S. economy?
Consider a family in Asia, Europe or perhaps Canada
that wants to take a vacation to “see the world.”
There are hundreds of millions of people like this
across the globe. The family is confronted with a
cornucopia of choices of where to spend its money
in this wondrous world we live in. One can visit the
Eiffel Tower and the art museums in Paris, or ski
the Swiss Alps, visit the Great Wall of China, the
coliseum in Rome, scuba dive the Great Barrier Reef
in Australia, or attempt to climb Mount Everest or
Kilimanjaro.
But it is America that arguably has the greatest and
most diverse travel attractions in the world - from
coast to coast no other nation has all the natural
beauty – such as our crown jewels of National Parks
- or the manmade attractions from Disney World to
Las Vegas to Hollywood.
It turns out that the destination choices tourists, like
this family, make has a big impact on the economies
of the places they visit. A lot of money is at stake
here in these sweepstakes. An estimated one billion
people travel every year outside their home country
for business or pleasure. In 2017, international
tourism generated $1.6 trillion in export earnings
worldwide. It’s a competitive world out there and
every nation is trying to lure this jackpot of tourist
dollars inside their borders.
This report finds that promoting and facilitating
foreign tourism to the United States can be an
effective way to increase American jobs and
national output while reducing the nation’s trade
deficit. Every time a foreigner travels to the United
1
http://tinet.ita.doc.gov/outreachpages/download_data_table/2008-2017-new.pdf
States as a tourist, their spending in America is
counted as export income for the U.S. economy, and
thus reduces the U.S. trade deficit.
Data from the U.S. Department of Commerce reveal
that foreign travel to and purchases in the United
States added $251 billion in export income for the
U.S. economy in 2017. On the flip side, U.S. residents
spend $174 billion when traveling abroad, which
counts as an import for the U.S. economy. As a
result, travel and tourism generated a $77 billion
international trade surplus last year – more than
any other industry except for financial services –
which reduces the U.S. overall trade deficit by an
equivalent amount.1
Travel is a major export for the U.S. economy,
accounting for 11 percent of total U.S. exports of
goods and services in 2017, up from less than 9
percent a decade ago (2007). This increase in share
is a consequence of the travel exports (up 74% from
2007-2017) growing much faster than other exports
of goods and services during this period (up 39%).
Travel has become the second largest export
industry behind only transportation equipment.
Travel and tourism jobs are jobs that stay home. The
table below lists the industries that are our largest
“exporters.” With tourism coming in at number
two on the list, it remains an important strategy to
reduce our trade deficit.
Expenditures related to international travel to the
U.S. were responsible for an estimated 1.2 million
Page 01
American jobs in 2016 and over $34 billion in wages This paper examines what would happen if over the
and salaries paid out to the domestic workforce.2 next four years, the U.S. were to attract 100 million
tourists a year by 2021, up from 77 million in 2017. 3
International travel and foreign purchases also This 30 percent rise is possible, given that over the
increase state and local tax revenues by about $50 past decade (as a fallout from the recession and
billion a year—helping pay for schools, police, health other factors that have made it more difficult for
care coverage, and roads. foreigners to come to the U.S.) tourism to the U.S.
as a share of all international travel has fallen to 1
in 8. If we retained America’s 2015 global long-haul
TOP U.S. INDUSTRY EXPORTS,* 2013 market share:
1. TRANSPORTATION EQUIPMENT $240.4 Billion
• Increased tourism to this country by about 20
2. TRAVEL $214.8 Billion million more tourists each year.
• A reduction the U.S. trade deficit by an
3. CHEMICALS $189.3 Billion additional $40 billion a year.
• The creation more than 100,000 new jobs.
4. MACHINERY, EXCEPT ELECTRICAL $141.9 Billion
• The addition of $10 billion in total wages paid
5. OTHER BUSINESS SERVICES $123.4 Billion out - mostly to low and Middle income workers.

6. COMPUTERS & ELECTRICAL PRODUCTS
7. PETROLEUM & COAL PRODUCTS
8. FINANCIAL SERVICES
$122.7 Billion Obviously, the major impetus for this tourism
rebound to occur will depend on the private sector.
$118.2 Billion
But Washington could make three changes to
$84.1 Billion
promote tourism to the U.S..

9. PRIMARY METAL PRODUCTS
10. FOOD & KINDRED PRODUCTS
11. AGRICULTURAL PRODUCTS
*Domestic Exports
$69.6 Billion First, the tourism and business travel visa system
could be expedited to make it easier for tourists
$67.3 Billion to travel to the United States. This could include
better staffing at ports of entry. This could be
$66.2 Billion
accomplished in a way that would allow our border
enforcement and State Department focus its
Source: U.S. Travel Association
resources on keeping out terrorists, criminals, and
other undesirables.

Second, global entry expansion will make it much

TRAVEL HELPS BUST THE DEFICIT easier for known tourist and business travelers to
(IN BILLIONS) enter the U.S. hassle-free. The Visa Waiver Program
$300 should be modernized and expanded to allow
expedited entry for visitors from nations like Poland
$250
and Israel that do not harbor terrorism.
$251
$200
Third, Donald Trump could use the bully pulpit to
$150 $174 promote America as a hospitable and welcoming
$100 tourist destination. President Trump has been a
one-man Chamber of Commerce in promoting
$50
$77 American industries and products when he travels
$0 abroad. He has said many times in his foreign
travels that “America is open for business.”4 It
Travel & Tourism Travel & Tourism Travel & Tourism
would be constructive for the president to lay out
Exports Imports Surplus
the welcoming mat to tourists who will support
Source: National Tourism Trade Office American businesses when they arrive here.

2
https://www.ustravel.org/answersheet Page 02
3
https://www.U.S.today.com/story/travel/2018/09/13/international-visitors-us-up-slightly-2017/1196463002/
4
http://time.com/5120097/donald-trump-davos-speech/
The economic benefits would hit all areas of the
nation. And since the travel and tourism industry
tends to hire lower skilled and younger workers, the
financial benefits would go disproportionately to
working class Americans.
Why Tourism Matters
Many Americans underappreciate the importance
of foreign tourism to the United States as a driver
for growth. But the financial impact on the states
and communities is well summarized in a study by
economists at Michigan State University quite aptly
summarized a hypothetical scenario:
Let’s say a region attracts an additional
100 tourists, each spending $100 per day.
That’s $10,000 in new spending per day
in the area. If sustained over a 100 day
season, the region would accumulate a
million dollars in new sales. The million
dollars in spending would be distributed
to lodging, restaurant, amusement and
retail trade sectors in proportion to how
the visitor spends the $100. Perhaps 30%
of the million dollars would leak out of
the region immediately to cover the costs
of goods purchased by tourists that are
not made in the local area (only the retail
margins for such items should normally
be included as direct sales effects).
The remaining $700,000 in direct sales
might yield $350,000 in income within
tourism industries and support 20 direct
tourism jobs. Tourism industries are labor
and income intensive, translating a high
5
https://msu.edu/course/prr/840/econimpact/pdf/ecimpvol1.pdf
proportion of sales into income and
corresponding jobs. The tourism industry,
in turn, buys goods and services from
other businesses in the area, and pays
out most of the $350,000 in income as
wages and salaries to its employees. This
creates secondary economic effects in
the region. The study might use a sales
multiplier of 2.0 to indicate that each dollar
of direct sales generates another dollar
in secondary sales in this region. Through
multiplier effects, the $700,000 in direct
sales produces $1.4 million in total sales.
These secondary sales create additional
income and employment, resulting in a
total impact on the region of $1.4 million
in sales, $650,000 in income and 35 jobs.
While hypothetical, the numbers used here
are fairly typical of what one might find
in a tourism economic impact study. A
more complete study might identify which
sectors receive the direct and secondary
effects and possibly identify differences
in spending and impacts of distinct
subgroups of tourists (market segments).
One can also estimate the tax effects of
this spending by applying local tax rates
to the appropriate changes in sales or
income. Instead of focusing on visitor
spending, one could also estimate impacts
of construction or government activity
associated with tourism.5
There are also social repercussions and civic and
national pride benefits of travel and tourism. Here is
how U.S. Today recently summarized these effects
in a survey on the effects that tourism has on
American society:
Page 03

Tourism has long been cited by world
leaders as a driver of peace and security
through understanding. In the 21st
century, tourism is closely linked to
development, embracing a growing
number of new destinations – hence
new jobs. Tourism can create civic
and national pride by encouraging
cultivation and sharing of local customs,
food, traditions and festivals. Personal
exchanges between hosts and guests
goes a long way toward fostering better
cultural understanding. Tour operators are
focusing on the experiential travel trend,
providing more authentic and immersive
experiences for their guests. Open spaces
and national parks in countries around
the world are good for replenishing both
body and soul… 6
To be sure, there are some negative effects from
tourism as well – including traffic congestion,
language barriers, higher costs of local services, and
risks of terrorism. But in almost all cases the positive
effects to workers and communities of tourism
outweigh the negative effects, which is why almost
every area wants to be a tourist destination to bring
the flow of dollars.
The numbers on a national level are astoundingly
large. The chart below shows the trend in
international tourist arrivals over time. From 2013 to
2017 the number of tourists arriving in the United
States climbed from 69 million to 77 million.7 These
tourists spend on average about $3,000 per trip,
including airfare.
TOTAL INTERNATIONAL ARRIVALS TO U.S.
(IN MILLIONS)
80
78
76 77.8
76.9
74
76.4
75
72

70

68 69.8
66

64
2013 2014 2015 2016 2017

Source: National Tourism Trade Office

The World Travel and Tourism Council recently

examined the potential growth of the U.S. Travel
industry over the next decade relative to other
major sectors of the economy. It found that only the
oil and gas industry is expected to grow at a faster
pace from 2017-27.8 As the figure shows, travel is
expected to grow at 3.3% per year versus 2% for the
entire economy.

6
https://traveltips.U.S.today.com/positive-negative-effects-tourism-63336.html Page 04
7
https://travel.trade.gov/research/monthly/arrivals/
8
https://www.wttc.org/-/media/files/reports/benchmark-reports/country-reports-2017/U.S..pdf
 US GDP FORECAST BY SECTOR One way to appreciate the economic and jobs
impact of tourism is to examine how international
CASGR% 2017-2027 visitors benefit a state like Florida. According to a
2018 report by the tourist promotion group VISIT
1.2% 1.7% FLORIDA: “In 2016, out-of-state visitor spending
in Florida reached a record $112 billion, an increase
of 2.7 percent over the previous year. Visitors
generated $88 billion, or roughly 10 percent, of
Florida’s total Gross Domestic Product (GDP), up
4.2 percent over 2015, and visitors generated $11.6
BANKING TOTAL
ECONOMY billion in state and local taxes, up 3.3 percent.”9
Clearly, tourism is a driver of growth in the Sunshine
State.
2.3% 3.3%
In response to these upbeat numbers, then-
Governor Rick Scott said, “In 2016. Florida’s tourism
industry helps support more than 1.4 million jobs
across our state and is a major driver in our growing
economy.”10
CHEMICALS TRAVEL &
MANUFACTURING TOURISM

1.2% 2.0%

AUTO AGRICULTURE

0.4% 1.9%

MINING RETAIL

2.0% 3.8%

FINANCIAL CONSTRUCTION
SERVICES

Source: World travel & Tourism Council

9
https://www.floridatrend.com/article/23799/visit-florida-releases-new-economic-impact-figures Page 05
10
Ibid
Nationally the employment impact of travel is over $77 billion.12 This means that our trade deficit
important and growing as well. From 2008 to 2017, would have been 14% larger had it not been for
travel employment rose at a rate of 20% versus 12% tourists traveling to the United States and spending
for all industries. See figure below. money here.

During the recovery from the 2008-09 recession,

travel has had an outsized impact on reducing the
trade deficit. As the figure below shows, the deficit
in trade increased by more than $54 billion from
TRAVEL EMPLOYMENT GROWS FASTER THAN
2010-2017. The trade surplus from foreign visitors to
THE REST OF PRIVATE SECTOR • 2008-2017
the United States ROSE over than same time period
by $19.5 billion. The trade deficit would have risen
20% almost 40% faster were it not for the growth of
20% travel and tourism.
17%

14%

11% CHANGE IN THE U.S. TRADE BALANCE

12%
2010 – 2017
8%

5%
Travel Rest of Private Sector

Source: Bureau of Labor Statistics

Many industries in America are directly impacted

by tourism. These include restaurants, hotels,
taxi services, airlines, retail shopping centers,
amusement parks, sporting events, and so on. These
expenditures are directly responsible for roughly 1.2
million jobs and at least $30 billion in worker pay
and benefits.
The jobs that are created in these industries are
often ideal “starter” jobs for young Americans
as they first enter the workforce. The economic
evidence shows that when workers enter the
workforce and start to earn a paycheck at an earlier
age, their lifetime earnings rise. Moreover, jobs in
the leisure, hospitality, travel and retail industries are
much less likely to be “outsourced” to other nations
than the manufacturing and service jobs in other
industries.
Source: U.S. Census Bureau, International Trade Administration
This is especially important given the current
administration’s desire to reduce our trade deficit.
From the first day Donald Trump started running for
president he promised to reduce our half-trillion-
dollar trade deficit.13 Increasing tourism is one easy
way to do that.
Also, as a pure economic accounting measure, the
U.S. GDP goes down when we import and it goes up
when we export (i.e. sell more goods and services to
foreigners). This means that more tourism translates
to a higher GDP every year.

Think about it this way. In 2017 the U.S. trade deficit

stood at $552 billion.11 But the tourism surplus was

11
https://www.census.gov/foreign-trade/statistics/historical/gands.pdf Page 06
12
http://tinet.ita.doc.gov/outreachpages/download_data_table/2008-2017-new.pdf
13
https://ustr.gov/sites/default/files/files/Press/Reports/2018/AR/2018%20Annual%20Report%20I.pdf
Why Has Tourism to the U.S. Stalled?
The United States clearly has some of the greatest
and undoubtedly the widest variety of tourist
attractions in the world. These include natural
attractions—including our spectacular national
parks, our mountains, beaches, warm weather
vacation spots, and so on. We have also created
shopping paradises, glamorous cities from New
York to Chicago to San Francisco and thoU.S.nds
of magnificent destinations from Charleston South
Carolina to Las Vegas and Laguna Beach California
and other major attractions. What other nation
has both a Hawaii and Alaska? The manmade and
natural attractions make nearly every state in the
nation a desirable tourist location, which means
many multiple trips to experience it all. No nation
has the wide array of five star restaurants and hotels
and spas sporting events and so on than the U.S.
There is only one Las Vegas, one Wrigley Field, one
Yosemite, one Mount Rushmore, and one Times
Square.
Yet, the chart below shows the problematic trend in
travel to these shores. While the numbers entering
the U.S. is up, our market share is down. The decline
is a missed opportunity to raise the U.S. growth rate
and lower our trade deficit.
Page 07
The growth rate in foreign visitor spending in the INTERNATIONAL TOURISM RECEIPTS, 2017
United States since 2015 has also fallen relative to (IN BILLIONS)
the growth rate in other large nations, according to
data from the U.S. Travel Association. More people USA 210.7
travel to France and Spain in a year than the United 68
Spain
States and Spain has overtaken the U.S. to rank
second.14 France 60.7

Thailand 57.5
Some of that is clearly a result of the lower costs
for the half billion people living in Europe to travel UK 51.2
across the continent (often by a short train ride)
Italy 44.2
than to fly to the U.S. But America could be doing
better. Is that a tear rolling down Honest Abe’s Australia 41.7
cheek in his memorial?
Germany 39.8

Marco (China) 35.6

34.1
INTERNATIONAL TOURISM ARRIVALS, Japan
2017 (IN MILLIONS) 0 50 100 150 200 250

France 86.9% Source: UN World Tourism Organization

Spain 81.8%

USA 76.9%

China 60.7% One survey by the World Economic Forum “Travel

Competitiveness Index” rated the U.S. 6th in the
Italy 58.3% world for travel.16 That’s good, but not good enough.
There is no reason the U.S. can’t be number one for
Mexico 39.3%
travel destination desirability.
UK 37.7%
So why aren’t the Brits, Germans, Japanese,
Turkey 37.6% Australians and Chinese coming at the rate they
used to? And why is it that even as international
Germany 37.5%
travel is up worldwide, America’s share of the
Thailand 35.4% tourism traffic has failed to keep pace?

0 10 20 30 40 50 60 70 80 90 100 Here are the three likeliest explanations. First,

the dollar has strengthened which makes it more
Source: UN World Tourism Organization
expensive to travel to and shop in America.

Second, the U.S. Government has made it more

difficult to come into the United States as a result of
toughened customs and immigration enforcement.
The good news is that though the U.S. share of
This has been part of efforts keep terrorists and
travel and tourism dollars has fallen, the U.S. is still
other bad actors outside these borders.
the number one place where foreign travelers spend
their dollars. The United Nations finds that the U.S.
And third, hospitality matters. Many foreigners don’t
receives about three times more in revenues from
like Trump or they – mistakenly, in my view – think
tourism than any other nation.15 See Figure below.
that he doesn’t like them. His nationalist America

14
https://www.e-unwto.org/doi/pdf/10.18111/9789284419876 Page 08
15
Ibid
16
http://reports.weforum.org/travel-and-tourism-competitiveness-report-2017/country-profiles/#economy=U.S.
First policies have clearly had success in growing
the domestic economy, but the rhetoric coming
out of Washington regarding foreigners is not
always welcoming. We know that this can persuade
foreigners to avoid coming to the U.S. and spending
their money here.
What Can Be Done to Make
America Number One Again
in Tourism?
There isn’t a lot we can or should do about the value
of the dollar. The dollar is strong because the U.S.
economy is roaring and foreigners want to invest in
the U.S. We certainly don’t want to try to get rich by
substantially and intentionally weakening the dollar.
What we need is a stable dollar with tame inflation
at home.
Here are four steps that would help promote
tourism to the U.S., while safeguarding our security
and safety from terrorists or criminals who would do
us harm.
1. Expedite entry into the U.S. in order to reduce
hassles and delays for families and business
travelers. This is tricky, because we surely
don’t want to allow criminals, terrorists or drug
runners to slip through the cracks. But customs
and immigration enforcement need to better
target the potential troublemakers.
2. Expand the visa waiver and global entry system
to reduce the psychic cost of international travel
to the U.S. for those who are known to be zero
security threat.
3. Reverse the so-called “Trump Slump” in tourism,
by having the President rhetorically laying out
the welcome mat to foreign travelers. President
Trump could and should sound a welcoming
message through such means as public service
announcements and international press
briefings.
4. Set a national goal of 100 million tourists
by 2020 and 150 million by 2030. These are
attainable goals and private and public efforts
should combine to make attaining those goals a
reality.
Conclusion: America’s $30
Billion and 100,000 Jobs
Opportunity
What if these policies and goals worked to restore
the U.S. market share in foreign travel relative
to other competitor nations? We have run these
numbers and the results show that each year the
United States adds 20 million more visitors, we
would add $40 billion to annual GDP and 100,000
to 200,000 additional jobs to the American
economy. Over a decade, the U.S. Travel Association
believes the added GDP would be nearly $400
billion. That would generate some $100 billion
in added tax revenues to the coffers of states,
localities and the federal government.
This should be a top economic goal of the Trump
Administration. In his foreign travels, Donald
Trump has emerged as a highly effective one-man
Chamber of Commerce selling America to investors
and CEOs of major companies. Come to America
to do business, he has urged. “America is open for
business,” he said to a world audience at a recent
G8 meeting.
Now he needs to declare that America is open
for tourism as well. This shouldn’t be a hard sell
to foreigners given the multitude of unrivaled
attractions in the U.S.. A more robust pro-tourism
strategy will generate more GDP and more tax
revenues. This means lower budget and trade
deficits and more jobs here at home.
Stephen Moore is the distinguished visiting fellow for the
Project for Economic Growth at the Heritage Foundation
and an economic consultant with FreedomWorks. He
served as a senior economic advisor to the Trump
campaign.
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