Trump’s ‘careless tweets’ likely to cost US jobs – especially in tourism

PUBLISHED : Sunday, 02 April, 2017, 2:33pm
UPDATED : Sunday, 02 April, 2017, 10:36pm

In Apec in recent years there have been earnest efforts to help governments undertake regulatory impact assessments – quick and cheap cost-benefit exercises that help officials measure unintended, and possibly harmful, effects of new legislation. We call them RIAs.

Recent developments in the US suggest we need to add a new kind of audit, called TIAs – Twitter Impact Assessments.

And we can start with an examination of how the US President’s Twitter-ignited campaign to keep the country safe by banning Muslim travellers from a select group of mainly Middle Eastern countries is in the process of clobbering the country’s critically important travel and tourism industry.

Data revealed last week in the World Travel and Tourism Council’s (WTTC) annual review of global travel shows just how important tourists are to all of our economies – and none more so than the US. Numbers are admittedly stretched by adding “indirect and induced” impacts to the direct stimulus of travel and tourism, but together, the WTTC says these contributed US$7.6 trillion to GDP globally – over 10 per cent of world GDP – and over 290 million jobs. The “hard” direct contribution is still hefty – US$2.3 trillion, and 109 million jobs.

According to the WTTC, the US as the world’s richest travel market, and the second most important international travel destination (77 million last year, behind France with 84 million), earned US$1.5 trillion last year, and sustained 14.5 million jobs. But a combination of a strong dollar and the travel ban is set to bite hard, with foreign visitor spending forecast to fall by at least 0.6 per cent, compared with growth worldwide averaging 3.6 per cent.

WTTC president David Scowsill noted that travel and tourism in the US has only recently risen back to pre-9/11 levels, as “a decade of economic stagnation” in the travel and tourism sector due to strict visa policies imposed by Homeland Security has cost the sector an estimated US$600 billion.

It is early days for exact data measuring the impact of Trump’s travel ban, in particular because a downturn was expected anyway because of strength of the dollar, but early signals have alarmed the US travel and tourism industry. Oliver Jager, CEO of travel consultant ForwardKeys, reflects this angst: “The data forces a compelling conclusion that Donald Trump’s travel ban immediately caused a significant drop in bookings and an immediate effect on future travel.”

Airline bookings to the US fell 6.5 per cent in the week after Trump first engaged battle on Muslim travellers. Online booking websites and companies tracking flight and holiday searches report a 6-17 per cent fall in searches to US destinations.

Online booking websites and companies tracking flight and holiday searches report a 6-17 per cent fall in searches to US destinations

Consultants Tourism Economics are already predicting a loss in 2017 of 6.3 million international visitors, and of US$10.8 billion in revenues. Mike McCormick of the Global Business Travel Association reports that US$185 million in bookings have already been lost because of the ban. The New York Tourism Board is forecasting a fall of 300,000 visitors to the Big Apple in 2017, compared with original predictions of a 400,000 increase. Hotel tariffs in San Francisco, New York and Las Vegas have been cut by between 32 and 39 per cent.

And this is just the first wave of responses. It is too early to estimate how many applications to study in US schools and universities have been canned, in favour of applications to Australia, the UK or Canada.

Even if some miracle allows the dislocation due to the travel ban to blow over speedily, it seems some further TIAs will soon be needed: the Trump team is busy preparing plans to build a wall to keep out Mexican “bad-asses”, to renegotiate with Mexico and Canada the North American Free Trade Agreement – claimed by Trump to be the “worst trade deal ever” – and is considering terms of engagement to battle China and Germany on their large trade surpluses with the US. Note Trump’s “welcome tweet” to Xi Jinping as they prepared for their Mar-a-Largo meeting this week: “The meeting with China will be a very difficult one in that we can no longer have massive trade deficits and job losses. American companies must be prepared to look at other alternatives.” Quite a Welcome Mat not just to Mr Xi, but to the 122 million mainlanders that are now international travellers.

Surely any TIA exercise would alert Mr Trump on who the US’s main sources of tourists and business travellers are: first and second by far are Canada and Mexico, fifth is China and sixth is Germany. He could not have picked his targets more exquisitely to punish his tourism economy – and no doubt other sectors as well.

While Trump is battling to “make America great again” by rebuilding manufacturing, he might do well to remember that car exports earned the US$152 billion last year, while revenues earned in the travel and tourism sector by international visitor spending amounted to US$246 billion.

Judge in Hawaii extends order blocking Trump’s travel ban nationwide

As Adam Sacks, president of Tourism Economics noted recently: “It is extraordinarily difficult to convey a message of welcome above the volume of ‘American first’ rhetoric as it reverberates through immigration, trade and visa policies.”

While Trump and his team seldom seem to look overseas for insights that might influence their policymaking, they could do worse than look at Hong Kong, whose tourism economy has in recent years surged ahead of the broader economy as rising millions of affluent mainland Chinese have come over the border with fully loaded wallets.

The upswelling of anti-mainland sentiment among a small but high-volume section of Hong Kong people up to and around the Occupy Central protest season in 2014 has cost our tourism economy dearly. Mainland visitor numbers peaked in 2014 at 47 million, but have since slumped by nearly 10 per cent to 42.8 million. Spending by mainlanders tumbled by 10 per cent (HK$24.4 billion, or US$3.14 billion) between 2014 and 2015, and was falling even more sharply in the first half of last year.

Just as Hong Kong people might have targeted their ire a little less masochistically, so Trump – with a little help from some TIAs – might have done the same. One wonders just how many jobs will need to be lost before Trump discovers what British war-time posters warned seven decades ago: “Careless talk costs lives”. In this case, “Careless tweets cost jobs”.

David Dodwell researches and writes about global, regional and Hong Kong challenges from a Hong Kong point of view