How U.S. Tariffs Could Reshape Tourism in Canada – A Boon or a Bust?

What does a weakened Canadian dollar mean for the future of tourism industry in Canada, particularly British Columbia? As U.S. tariffs reshape trade relations, the answer could determine the fate of one of Canada’s most beloved destinations. The implementation of U.S. tariffs on Canadian goods has introduced significant uncertainty into the economic landscape, raising concerns among stakeholders in British Columbia’s tourism sector about what lies ahead. For Vancouver Island—a destination heavily reliant on both international and domestic visitors—the economic impacts could be particularly pronounced. On one hand, a weakened Canadian dollar could attract more American travelers eager to capitalize on favorable exchange rates. On the other, persistent inflation and declining consumer confidence in the United States might deter Americans from discretionary travel altogether. At home, Canadians are simultaneously navigating their own financial challenges, as trade disruptions and rising costs continue to constrain their spending power and travel plans. Amid these complex, interconnected economic pressures, British Columbia’s tourism industry must anticipate and adapt strategically. This article explores three distinct yet plausible scenarios to help businesses, policymakers, and stakeholders in British Columbia better understand potential outcomes, prepare effectively, and identify opportunities amidst this ongoing uncertainty.

The implementation of U.S. tariffs on Canadian goods has introduced considerable uncertainty into Canada’s economic landscape, prompting concerns among stakeholders in the tourism sector nationwide. As of early 2025, the Canadian dollar has experienced notable depreciation in response to these trade tensions, reaching levels not seen in recent years (Reuters, 2025). This currency shift holds significant implications for tourism, especially for regions like British Columbia and, more specifically, Vancouver Island, which rely heavily on both cross-border visitors and domestic travelers.
Historically, fluctuations in currency valuation have proven influential in shaping cross-border tourism. Previous periods of a weakened Canadian dollar—such as during the mid-2010s—have typically led to a surge in visitation from the United States, positively impacting tourism-driven communities on Vancouver Island and across British Columbia. For instance, according to Destination BC, in 2023 alone, the number of U.S. travelers visiting Vancouver Island more than doubled compared to the previous year, largely driven by favorable exchange rates (BCRTS, 2024). This influx translated directly into increased revenue streams for accommodations, dining establishments, local tour operators, and other tourism-related businesses.
Currently, however, this historical pattern faces new complexities. While a weaker Canadian currency remains enticing for American visitors in principle, recent consumer confidence indices from the United States reveal mixed signals. Persistent inflation in the U.S. coupled with heightened economic uncertainty might temper discretionary travel spending, prompting potential visitors to reconsider or postpone trips abroad (Conference Board of Canada, 2025). Indeed, recent industry reports indicate a slowdown in advanced bookings from American travelers to Vancouver Island and other BC destinations, reflecting cautiousness amid rising costs of living (CHEK News, 2025).
Yet, domestic travel within Canada offers another dimension for consideration. With international travel increasingly expensive due to currency depreciation, many Canadians may choose domestic destinations over foreign vacations. Regions such as Vancouver Island stand to gain from this shift by promoting diverse tourism experiences—from Indigenous cultural offerings and nature-based excursions to seasonal specialties like winter storm watching in Tofino and year-round outdoor recreation opportunities in the Comox Valley and Nanaimo regions.
Domestic tourism has long been a cornerstone of British Columbia’s economy, and the current economic climate presents an opportunity to strengthen this sector further. According to Destination Canada, domestic travel spending accounted for over 70% of total tourism revenue in 2023 (Destination Canada, 2024). By emphasizing affordability, accessibility, and unique local experiences, Vancouver Island can position itself as a top choice for Canadian travelers. For example, promoting road trips, staycations, and regional travel packages could appeal to budget-conscious families and individuals seeking value without compromising on quality.
To fully leverage the advantages of a weaker Canadian dollar while mitigating its risks, businesses and policymakers should proactively adapt by diversifying target markets and developing strategic campaigns aimed at domestic and alternative international markets such as Europe and Asia, whose visitation numbers have shown recent growth. These proactive approaches could buffer against potential volatility caused by fluctuations in U.S. visitation and strengthen the resilience of BC’s tourism economy.
In summary, based on this scenario, while tariffs pose clear challenges, the resulting currency depreciation could present strategic opportunities for tourism in British Columbia. Navigating this evolving economic landscape requires proactive, informed responses from stakeholders. Policymakers should prioritize targeted investments in tourism infrastructure, particularly projects enhancing regional connectivity and sustainable travel, thereby increasing long-term resilience. Businesses could consider diversifying their marketing portfolios by expanding promotional efforts beyond traditional U.S. markets, targeting emerging international markets such as Europe and Asia. Additionally, fostering stronger partnerships between government, industry associations, and Indigenous communities could enrich visitor experiences, positioning Vancouver Island as a premier sustainable and culturally engaging destination. Lastly, leveraging advanced analytics and visitor-tracking technologies would allow businesses to swiftly adapt to changing consumer behaviors, maximizing the industry's ability to thrive amid ongoing uncertainty.

While a weaker Canadian dollar can be advantageous for attracting American tourists, the recent implementation of U.S. tariffs presents a critical counterbalance—declining consumer confidence south of the border. As of March 2025, the U.S. has seen sustained inflationary pressures triggered partly by tariffs imposed on imports from Canada, Mexico, and China. These trade tensions have significantly influenced consumer sentiment, causing many Americans to reconsider discretionary spending, particularly travel expenses (Davidson, 2025). Historically, leisure travel is among the first expenses households reduce during times of economic stress, a phenomenon witnessed clearly during past recessions (Song, Li, Witt, & Fei, 2010).
The Conference Board recently reported that U.S. consumer confidence dropped notably in early 2025, largely attributed to increased prices resulting from tariff-related inflationary pressures (Conference Board, 2025). Major retailers across the United States have already observed slowed consumer spending patterns and caution among American households, particularly in categories associated with discretionary spending such as travel, dining, and leisure (Associated Press, 2025). If these conditions persist, Canada—and British Columbia in particular—could experience a significant decline in visitation from its largest international market.
The impact of declining U.S. visitation would be particularly pronounced in economic regions such as on Vancouver Island, where tourism businesses rely heavily on cross-border travel. Reduced bookings from American travelers could lead to lower occupancy rates in hotels, diminished restaurant revenues, and decreased demand for guided outdoor activities such as whale-watching, kayaking, and nature excursions. Tourism-dependent small businesses, already sensitive to seasonal fluctuations, could face additional challenges, including cash-flow instability and employment volatility.
Moreover, the domestic market might not fully compensate for the decline in international visitation, as Canadian consumers themselves grapple with increased costs stemming from trade disruptions and rising inflation. Destination Canada recently reported that, despite rising interest in domestic vacations, overall travel spending by Canadians is expected to decline by roughly 8% in 2025 due to decreased disposable income (Tourism Outlook, 2025). This dual pressure from both international and domestic markets could amplify economic difficulties for local businesses.
Similar to the recommendations for the first scenario, diversifying target markets to include visitors from Europe and Asia—regions currently less affected by the U.S.-Canada trade disputes—could help offset declines from the American market in the second scenario, as well. Also, businesses might consider offering targeted promotions and flexible pricing models to appeal to budget-conscious domestic travelers, emphasizing value-added experiences and affordability. Policymakers, meanwhile, can support the sector by investing in targeted marketing campaigns, and financial support mechanisms for small- and medium-sized enterprises most vulnerable to fluctuating visitor volumes. While declining U.S. consumer confidence presents significant challenges, proactive and adaptive measures by both industry stakeholders and policymakers could help stabilize Vancouver Island’s tourism sector, ensuring resilience amidst the current uncertainty.

Despite the initial disruptions caused by U.S. tariffs, another plausible outcome involves diplomatic negotiations that successfully ease or repeal tariff measures. As of March 2025, diplomatic channels between the United States and Canada remain active, signaling potential for resolution and economic stabilization. Historically, the easing of trade tensions has directly correlated with improvements in consumer confidence, subsequently benefiting cross-border tourism (Gozgor et al., 2017). For example, following the resolution of the North American Free Trade Agreement (NAFTA) renegotiations in 2020, Canada-U.S. cross-border travel recovered notably, experiencing a sustained period of growth (Council on Foreign Relations, 2021).
Should tariffs be significantly reduced or repealed altogether, a rapid restoration of consumer confidence in the United States could follow. Research consistently underscores that stability in economic conditions enhances traveler confidence, subsequently increasing discretionary spending, including travel expenditures (Song, Li, Witt, & Fei, 2010). Given Canada and BC’s substantial reliance on cross-border tourism, such diplomatic progress would be particularly beneficial for its tourism industry. Local businesses, including hospitality providers, tour operators, and cultural attractions, could anticipate not only a return of U.S. visitors but also the potential for modest growth above pre-tariff visitation levels due to pent-up demand.
Additionally, the normalization of trade relations would likely stabilize exchange rates, creating a more predictable environment for international and domestic travelers alike. A stabilized Canadian dollar would also alleviate inflationary pressures in Canada, reducing financial uncertainty for Canadian travelers and encouraging increased domestic tourism spending (Destination Canada, 2024). For Vancouver Island, this scenario could translate into consistent demand across all seasons, benefiting regions such as Tofino, Nanaimo, Victoria, and smaller rural communities heavily dependent on tourism income.
To maximize the benefits of restored economic stability, tourism stakeholders should strategically prioritize market re-engagement. Policymakers and destination marketing organizations should consider targeted marketing campaigns aimed specifically at reactivating and expanding key U.S. markets, highlighting stability, affordability, and unique regional experiences. Furthermore, investing in sustainable tourism infrastructure—such as eco-tourism, cultural tourism, and year-round attractions—would ensure long-term growth beyond immediate recovery. Finally, leveraging advanced data analytics and predictive modeling to better understand and swiftly respond to visitor trends can further enhance the industry’s adaptability and resilience.
In sum, successful diplomatic negotiations could significantly mitigate the adverse effects of tariff-induced disruptions, presenting renewed opportunities for growth in British Columbia's tourism sector. By proactively implementing targeted strategies, Vancouver Island’s stakeholders can not only recover but also reinforce the industry’s long-term sustainability and economic vitality.

The three scenarios outlined—ranging from currency-driven tourism gains to declines linked to weakened consumer confidence, or even recovery through successful diplomatic negotiations—underscore the complexity and volatility inherent in Canada and British Columbia’s tourism industry amidst ongoing trade tensions. Policymakers and industry stakeholders must remain agile, strategically diversifying markets, embracing sustainable development, and strengthening domestic tourism to manage economic fluctuations proactively.
As British Columbia navigates the ripple effects of U.S. tariffs, one thing is clear: adaptability and innovation will be the cornerstones of a resilient tourism industry. By embracing change and seizing new opportunities—whether through Indigenous tourism, sustainable practices, or targeted marketing—Vancouver Island can emerge stronger than ever. Ultimately, by preparing thoughtfully for these possible outcomes, the tourism sector in Canada, British Columbia, and Vancouver Island can continue to thrive, reinforcing its resilience and ensuring long-term economic sustainability despite external uncertainties.