The return of Donald Trump as US president in January heralds a new period of heightened geopolitical uncertainty to add to the wars in Gaza, Lebanon and Ukraine and existing international tensions.
President Trump’s previous tenure from 2017 to 2020 was marked by chaotic changes in policy, including in relation to travel. The fact that the US economy grew and inflation remained low until the Covid-19 pandemic plunged the world into recession in Trump’s final year contributed hugely to his re-election last week.
Almost Trump’s first action as president last time was the imposition of a travel ban on seven majority-Muslim countries, later widened to 12, which in Iata’s description was “issued without prior warning, [placing] burdens on airlines to comply, to bear implementation costs and to face potential penalties”.
More: Trade expects Donald Trump’s re-election to have minimal impact
There was talk of a ‘Trump slump’ in international travel to the US in the first years of Trump’s presidency. Immediately following the ban, booking data analyst Forward Keys reported inbound bookings to the US fell 6.5%. Forward Keys later noted international flight arrivals to the US declined by 1.5% between February 2017 and September 2018 compared with a 4% increase globally.
Part of the reason was a US trade war with China, with Trump imposing tariffs on Chinese goods in 2018 – something he promises to ramp up when he returns. Forward Keys reported an 8% fall year on year in visitors from China to the US in 2018.
However, the exchange rate was the key issue. The dollar rose 13% in value against the pound and 16% against the euro between January 2017 and March 2018, making the US significantly more expensive.
UK visitor numbers to the US fell marginally from 4.6 million in 2016 to 4.5 million in 2017, but rose above 4.6 million in 2018 and to 4.8 million in 2019 despite the exchange rate.
Trump alarmed the US travel industry by proposing to scrap the Brand USA marketing association in a draft budget proposal to slash $3.6 trillion from federal spending, and when Trump reversed a 2014 trade pact with Cuba, hitting travel to the island, the WTTC noted: “Our sector needs consistency from governments.”
This time Trump has pledged to cut taxes and repeal the Biden administration’s Inflation Reduction Act which channelled vast funds into renewable energy, including sustainable aviation fuel production. He has also promised wholesale trade tariffs and to deport 11 million people without legal status.
The tariffs and deportations, which would reduce the availability of cheap labour, are forecast to boost inflation and thereby slow interest rate cuts, increasing the value of the dollar and making the US more expensive.
If that is the worst that happens, we may consider ourselves fortunate. But who knows what may be in store from January. Trump is due to be inaugurated for a second time on January 20.