The American travel industry clearly employs some great flacks (i.e., public relations specialists). We know this because they’ve sold two major global news organizations on the inane proposition that the Trump administration’s hostility to Muslims and foreigners in general is about to cripple their industry, and that – at least by implication – the U.S. economy will suffer grievously.
The first and perhaps most important failing in this Washington Post article and this Financial Times (FT) piece carrying this message was the glossing over of national security considerations. Both reports noted that the supposedly xenophobic impression was created by the president’s proposed temporary travel ban from six countries identified even by the Obama administration as major potential sources of terrorist threats, and by strengthened vetting procedures at the border. But neither mentioned the counter-argument (either from an administration official or from a non-government specialist supportive of Mr. Trump’s initiatives) that stronger protections for Americans quite naturally carry a price tag, or that any kinds of trade-offs between economic and national security goals are legitimate.
The closest that either piece came to communicating this kind of nuance was a statement in the FT article from Marriot’s CEO acknowledging the role that needs to be played by “some of these other issue [such as security risk]” in formulating policy. In fact, you need to read between the lines (specifically in the Post article) to get any sense that the nation has faced this kind of situation in the recent past – after the September 11 attacks – and that the losses incurred by the travel industry by no means came anywhere near derailing the economy.
One big reason is that the economic role of foreign travel and tourism in the United States simply isn’t very big. The industry itself says that it represented 8.10 percent of total American economic activity last year (a key context-setting fact that the Post completely ignored), when both its direct and indirect effects are included. Fair enough. The figure came out to about $1.5 trillion last year, but that total includes both foreign and domestic travel.
One way to back out the foreign portion of domestic travel and tourism is to use the trade statistics. They don’t provide perfectly apples to apples data, but they’re not way off, either, and show, according to the travel industry, that foreign tourists spent about $194 billion in the United States in 2014. These “travel exports” would have directly accounted for about 8.28 percent of the nation’s total goods and services exports that year, according to official U.S. trade data – and about 1.10 percent of the total economy. There are no statistics on the indirect effects and they of course deserve to be counted. But it’s inconceivable that they would justify even minor concern.
Further, the travel industry isn’t forecasting that all foreign travel to the United States will simply dry up, or even close. In fact, according to the industry, despite the Trump policies and intentions, travel and tourism in the United States (again, including purely domestic travel) will keep growing this year. It just won’t grow quite as fast (by 2.3 percent instead of 2.8 percent). In other words, the Trump effect would barely move the needle.
The implications couldn’t be more obvious. The Trump travel ban and related measures may be bad policy for any number of reasons, but damage to the economy – or even to the tourism industry – clearly isn’t one of them. It’s understandable that the industry itself is unhappy about the prospect of any losses – even moderately slower growth. But why is the media portraying this result as a catastrophe?