[Yanolja Research Brief] Vol.7 How U.S. Reciprocal Tariffs Reshape the Global Tourism Landscape: A GTAP-Based Analysis

The latest changes in U.S. trade policy are sending ripples through the global tourism industry. With new reciprocal tariffs in place, countries and businesses are adapting quickly to a shifting landscape. Here’s a concise overview of the most important trends and insights.

Tariffs Trigger Global Shifts

• The U.S. has implemented sweeping tariffs, including up to 145% on some Chinese imports, and a baseline 10% for many other countries. This policy is already reshaping trade and tourism flows worldwide.
• Short-term exemptions for select countries, like South Korea, add further uncertainty, making it difficult for businesses to plan ahead.

Impact on Major Economies

• United States: Both the accommodation/food service and air transportation sectors are experiencing notable declines. The air transport sector is especially hard-hit, with output dropping by as much as 11.35% in the most severe scenario. Domestic demand has not compensated for losses in international travel and logistics.
• South Korea: Domestic tourism is on the rise, with accommodation and food services growing by up to 0.76%. However, the air transportation sector is vulnerable, with output falling as much as 4.58% in high-tariff scenarios due to reduced inbound and outbound travel.
• Japan: A weaker yen is attracting more inbound tourists, boosting accommodation and food services by up to 0.59%. Still, air transportation faces declines, especially as tariffs increase.
• European Union: The EU is seeing a gradual decline in both accommodation/food services and air transportation, particularly as tariffs extend to the region. Transatlantic travel is especially affected.
• China: Unique among major economies, China’s tourism sectors are currently benefiting from strong government stimulus, but the sustainability of this growth remains uncertain.

Changing Travel Patterns

• Rising tariffs and uncertainty are leading travelers to favor domestic or regional destinations over long-haul international trips.
• Countries are responding by promoting local tourism, adjusting air routes, and offering incentives to attract visitors.

Strategic Recommendations

• U.S.: Stimulate domestic tourism, expand low-cost carrier partnerships, and seek diplomatic solutions to ease trade tensions.
• South Korea: Focus on inbound tourism competitiveness, diversify air routes, and leverage cultural assets.
• Japan: Capitalize on currency advantages, promote regional destinations, and strengthen domestic air travel.
• EU: Encourage intra-regional tourism and diversify markets beyond the U.S.
• China: Continue targeted support for domestic tourism while working toward long-term competitiveness.

What’s Next for the Tourism Industry?

• The global travel sector faces new challenges and opportunities. While some countries may benefit from increased domestic demand, others must navigate declines in international visitors and shifting travel patterns.
• The ability to adapt-through innovation, policy flexibility, and international cooperation-will be key to building a more resilient tourism industry.

Want to know more about how these changes could affect your business or travel plans? Visit our official website for the full analysis and detailed recommendations.

Yanolja Research Brief Vol.7