Trump’s trash talking costs Las Vegas
Lost in the focus on President Donald Trump’s tariffs is the economic impact his war of words is having on international visitation to Las Vegas. When the President of the United States tells people they are not welcome, could be detained, or even end up in an El Salvadoran prison, they listen and decide to go elsewhere. The result will hit Las Vegas hard with empty hotel rooms, vacant tables at restaurants and empty seats at shows. The President may cause a recession in Las Vegas from his hanging up the “not welcome” sign to the rest of the world.
International tourism is big business in Las Vegas, with over 5 million people estimated to have come last year. No country sends more people to Las Vegas than Canada. Canadians make up 30 percent of Las Vegas’s international travel. With domestic air travel to Harry Reid airport down almost 8% over the first two months of the year, Las Vegas can ill afford a sharp decline in international visitors.
Trump’s repeated insults to Canada have Canadians saying no thanks to coming to America. Air travel bookings from Canada to America for this summer are already down by 70 percent from last year. If that holds for Las Vegas, it would mean 1 million fewer international tourists to Las Vegas from Canada alone. Canada, Mexico, and England combine for almost two-thirds of all international tourists to Las Vegas, and while those used to be three of our closest economic and political allies, Trump seems to be doing everything he can to change that. Canada and England have issued new formal travel advisories to their citizens about the dangers of travelling to America
Las Vegas is the 6th most visited city in America, and like Orlando, the city whose economy is most dependent on travel and tourism. Other cities who host more foreign visitors have other main industries. Los Angeles has entertainment, New York has finance. But in Las Vegas travel and tourism are the core industries. Research I conducted at UNLV’s Brookings Mountain West with Ember Smith detailed how cities like Las Vegas that rely on travel and tourism fared even worse during Covid than those with core industries less directly impacted by pandemic related travel shutdowns. More than 40 percent of Nevada’s entire state GDP comes from tourism. Start hammering away at that and it does not take much to trigger a recession.
Trump’s trash talking of our allies is self-defeating in his attempt to reduce America’s trade deficit. Every dollar a foreign tourist spends in Las Vegas counts as an American export for purposes of counting our gross domestic product (GDP), and reduces our trade deficit. Economists think of it as America exporting the fun of Las Vegas to people living abroad. Promoting international visitation to the U.S. was part of President Obama’s successful campaign to double America’s exports and reduce our trade deficit. During my service on President Obama’s National Travel and Tourism Strategy we worked to make it easier for people to travel to America, creating jobs and growing our nation’s economy.
Trump campaigned with populist promises to win the votes of Nevadans like no taxes on tips and capping credit card interest rates at 10 percent. But he has governed as President quite differently, instigating a trade war, threatening Canada and Greenland with invasions, and praising Russian dictator Vladimir Putin.
America’s odds of a recession have shot up since Trump took office. Trump’s trade war, punitive actions against his perceived enemies, and attacks on the rule of law, along with Elon Musk’s slash and burn of government agencies have generated widespread business uncertainty, and shrunk consumer confidence.
The stock market’s crash on Trump’s tariffs last week could, in theory, be reversed should Trump walk back his tariffs. But the view that America is a great country to visit will be much harder to rebuild. More than one out of every ten tourists in Las Vegas comes from another country, with more from Canada than any other. When President Trump insults them, many will go somewhere else. That could push Las Vegas and all of Nevada into a recession more easily than people may realize, and it could last longer than whatever tariff rate is set today and changed tomorrow.
