ACTA warns of reduced travel spending as Trump tariffs loom

This story was updated on Sunday, February 2 at 9:32 a.m. EST

The Association of Canadian Travel Agencies and Travel Advisors (ACTA) is strongly condemning the sweeping tariffs imposed by the United States on Canadian goods.

In a statement posted Saturday (Feb. 1), ACTA said that while travel agencies and advisors may not be directly targeted by U.S. President Donald Trump’s 25 per cent tariff on most Canadian goods, “the economic consequences will be severe,” resulting in higher costs for businesses, weaker consumer confidence, and reduced travel spending.

“Canada has long been one of the United States’ closest allies and most reliable trading partners,” the association wrote in a statement posted to social media. “These tariffs harm not only Canadian businesses but also American consumers and companies that rely on seamless trade with Canada. History has proven that protectionist policies do not strengthen economies; they weaken them.”

READ MORE: Trump's tariffs – should the Canadian travel industry be worried?

Trump’s tariffs on imports from Canada are expected to take effect Tuesday (Feb. 4), a senior Canadian government official has told CBC News.

The Trump administration has “informally” told Canada that it will impose 25 per cent tariffs across the board on Canadian products and 10 per cent on energy products, the Toronto Star reports.

The trade war is being called an unprecedented strike against a longstanding ally that has the potential to bruise Canada’s economy.

The tariffs are expected to remain in place until President Trump is satisfied that Canada is doing enough to stop the flow of fentanyl into the U.S., CBC reports.

Canada will retaliate

At a press conference late Saturday, Prime Minister Justin Trudeau announced that the federal government, in retaliation, will slap 25 per cent tariffs on $30 billion worth of American goods coming into Canada as of Tuesday. The tariffs will then be applied to another $125 billion worth of American imports in three weeks' time.

"We don't want to be here, we didn't ask for this, but we will not back down in standing up for Canadians," Trudeau said.

The PM said tariffs would include American beer, wine and bourbon, as well as fruits and fruit juices, including orange juice from Trump's home state of Florida. Canada would also target goods including clothing, sports equipment and household appliances.

READ MORE: “I’m absolutely concerned”: Travel advisors, execs respond to trade war; some cancellations reported

Candace Laing, president and CEO of the Canadian Chamber of Commerce, said Trump's tariffs are "profoundly disturbing" and will have "immediate and direct consequences on Canadian and American livelihoods."

"Tariffs will drastically increase the cost of everything for everyone," Laing told CBC News.

“The ripple effect could be significant"

Canada’s economic conditions directly affect disposable income and consumer spending, which, if it’s severe enough, can have a negative impact on the travel industry.

Canadian travel executives have been monitoring the situation closely.

“A 25 per cent tariff could mean higher prices for everything from travel packages to cross-border shopping, potentially reducing the disposable income families have for vacations,” Zeina Gedeon, CEO of Trevello Travel Group, told PAX in a previous interview.

“The ripple effect could be significant. Fewer trips to the United States, more cautious spending, less disposable income for travel, and a shift towards more budget-friendly travel options.”

Gedeon said the situation could present an opportunity for travel advisors to promote domestic travel “and show Canadians the amazing experiences right here at home.”

Sharing his predication weeks back, Gregory Luciani, CEO of TravelOnly, said that if the tariffs activate, “travel to the U.S. will decline at the benefit of Mexico, Europe, Asia and the Caribbean.”

Meanwhile, Flemming Friisdahl, founder of The Travel Agent Next Door, said that Canadians will continue to travel “no matter what.”

“They want to get out of the cold, do a destination wedding, take a cruise, do a bucket list trip…Most Canadians feel that to travel is a right and not just a nice thing to do,” said Friisdahl, sharing his predictions last month. At the time, he said the “bigger concern” for Canadians, right now, is the weak loonie.

Impact on cross-border travel

A recent Corporate Traveller Canada survey looked into how small and medium-sized enterprises (SMEs), which make up 98 per cent of all business and almost 90 per cent of the private workforce in Canada, would cope with 25 per cent tariffs.

The study conducted by YouGov revealed that 85 per cent of SMEs would reduce cross-border travel for business if tariffs or trade restrictions were imposed.

"This move could have widespread implications for Canada’s economy, disrupting business relationships, supply chains, and the broader tourism and hospitality industries," said Corporate Traveller, which is owned by Flight Centre Travel Group, last month. 

READ MORE: U.S. tariffs could push Canadian businesses globally to avoid cross-border travel: survey

However, not all SMEs are aligned, the company said, showing the divided nature of the current economic climate.

Nearly half (48 per cent) of Canadian SME workers believe U.S.-Canada trade tensions would cause significant or some disruptions to business operations over the next 12 months, while 47 per cent expect minimal or no impact, the survey says.

Travel patterns may shift, however. In addition to 85 per cent of SMEs possibly reducing cross-border travel to the U.S., 59 per cent are expecting significant or moderate disruptions. 

Meanwhile, 77 per cent of SMEs are exploring alternative international markets, with this shift being more pronounced among small businesses (80 per cent) than medium enterprises (73 per cent).

“The conversations around potential U.S. tariffs and trade restrictions often focus on rising costs, but their impact on business relationships and cross-border travel is just as critical,” said Chris Lynes, managing director of Flight Centre Travel Group and Corporate Traveller, in a statement last month. “Our survey shows Canadian SMEs are not only cutting back on U.S. travel but also exploring new markets. While these shifts could reshape the landscape of North American business short term, the Canada-US partnership remains strong and will endure.”

Reduced business travel to the U.S. could significantly impact North American airlines, domestic and cross-border hospitality industries, and tourism services, as SMEs account for a substantial portion of these bookings, the company noted.

"Proper planning and robust travel management strategies will be critical for businesses responding to these shifts," the company said.

“The time to act is now”

In its statement Saturday, ACTA urged the U.S. government to immediately reverse the tariffs on Canada and other key allies.

“We call on the Canadian government to take decisive action to support travel agencies and travel advisors as they navigate the economic turbulence these policies will create,” the association said.

“Travel is an essential economic driver, and policies that undermine confidence in our markets threaten the livelihoods of thousands of Canadian travel professionals. The time to act is now.”  

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