Canadian Tourism and Trade Plummet Amid U.S. Tensions

A series of reports from Statistics Canada reveals a significant downturn in economic and travel ties between Canada and the United States. Canadian resident return trips from the U.S. fell 22% in January 2026 compared to the previous year, marking the 13th consecutive monthly decline. This trend is driven by political tensions and tariffs during the second term of President Donald Trump, including his rhetoric regarding making Canada the 51st state. For the first time since 1972, excluding the pandemic, return trips from overseas destinations exceeded return trips from the U.S. by automobile.

This travel slump has forced airlines to pivot; WestJet is suspending over a dozen U.S. routes, and Air Transat is canceling all U.S. flights for the summer to focus on Europe, Mexico, and the Caribbean. Simultaneously, Canadian businesses dependent on the U.S. fell by 2.9% between January 2024 and December 2025, with manufacturing employment dropping by 52,000 positions. The losses are most concentrated in Ontario, Quebec, and British Columbia.

In response, Prime Minister Mark Carney is working to diversify non-U.S. exports, specifically targeting China and India. Following a meeting with President Xi Jinping, China resumed group tourism to Canada. Meanwhile, industry leaders characterize the domestic business climate as an entrepreneurial drought, with many now awaiting the July review of the Canada-U.S.-Mexico Agreement (CUSMA) for signs of future stability.