The U.S. economy could lose billions of dollars in 2025 as a sharp drop in travel demand threatens a vital sector, according to analysts. The downturn is being linked to waning consumer sentiment, geopolitical concerns, and fallout from ongoing trade policies.

Recent earnings reports from travel-related firms—including airlines, hotel chains, and booking platforms—have sparked concern. Many have downgraded their revenue projections for the remainder of the year, citing fewer bookings and reduced international traffic.

According to a J.P. Morgan note published last week, “Anti-American sentiment could be driving a decline in international tourism, which is considered a service export.” The bank warned that a prolonged slump could lead to economic repercussions across multiple industries.

Travel and tourism contribute roughly 7.7% to the U.S. GDP and support more than 15 million jobs, according to the U.S. Travel Association. Any sustained downturn could severely impact employment and regional economies that rely heavily on tourism.

The Trump administration’s hardline stance on trade has also been blamed for reduced inbound tourism. Visa restrictions, diplomatic friction, and rising airfares due to tariffs on aviation components have deterred foreign visitors.

“International tourists are now choosing alternate destinations,” said Emma Caldwell, a senior economist at Global Travel Insights. “This isn’t just about politics—it’s affecting the bottom line for American businesses.”

Hotel occupancy rates in major cities like New York, Los Angeles, and Miami are reportedly down 8% year-over-year. Meanwhile, U.S. airlines are seeing declining transatlantic and Asia-Pacific bookings, with load factors dropping below 80% for the first time in over a year.

Online travel agencies are also feeling the pinch. Expedia and Booking Holdings have revised growth forecasts downward, citing fewer international searches for U.S.-based destinations.

Domestic travel has shown resilience, but analysts argue it won’t be enough to offset the loss of high-spending international tourists. According to the Commerce Department, international travelers spend an average of $4,200 per trip, far outpacing domestic spending.

“If the trend persists through summer and into the holiday season, we’re looking at a potential GDP impact in the tens of billions,” warned David Lo, a senior analyst at Beacon Strategies.

The travel industry is now urging the government to launch diplomatic and marketing initiatives to restore the U.S.’s appeal abroad. Industry leaders are also lobbying for more streamlined visa processes and improved airport infrastructure to regain lost ground.

While it’s unclear how quickly demand will rebound, economists are closely watching key summer travel indicators and policy developments to gauge the outlook for the sector.