US Border States Face Economic Hardships in 2025 as Canadian Tourism Plummets, with Rising Costs and Political Strains Exacerbating the Decline

Published on December 13, 2025

U.S. border states are facing significant economic hardships in 2025 due to a sharp decline in Canadian tourism, a trend that has long been a reliable source of revenue for these regions. The drop in visitors is primarily driven by rising costs, including a weakened Canadian dollar and increased travel expenses, which have made cross-border trips more expensive for Canadians. Additionally, political strains between the U.S. and Canada, including trade tensions and stricter border policies, have further discouraged travel. Together, these factors are severely impacting local businesses, particularly in the hospitality and retail sectors, and threatening the economic stability of these border communities.

Historically, U.S. border states have benefited from a steady influx of Canadian visitors, particularly for weekend trips, shopping excursions, and seasonal activities. These visitors have been key players in supporting local businesses, from hotels and restaurants to retail stores and entertainment venues. However, recent data indicates that the number of Canadians crossing into the U.S. has significantly declined, impacting these industries that have long depended on this tourist base.

A range of factors is behind this drop in Canadian tourism to U.S. border states. Political, economic, and logistical issues are all playing a role in making cross-border travel less appealing for Canadians in 2025. Below are the key contributors to the decline:

1. Political and Trade Strains

Ongoing trade and diplomatic tensions between Canada and the U.S. have created a climate of uncertainty for Canadian travelers. Disagreements over tariffs, trade policies, and general political relations have led many Canadians to view trips to the U.S. as potentially unpredictable or difficult. The perceived instability in relations between the two countries has resulted in fewer Canadians willing to travel south, particularly for spontaneous or short trips.

2. Rising Costs of Travel

A weakening Canadian dollar has made it more expensive for Canadians to travel to the U.S. As the value of the Canadian dollar drops in relation to the U.S. dollar, everyday travel expenses such as accommodations, meals, gas, and attractions become more expensive for Canadian visitors. For many Canadians, what was once an affordable cross-border getaway is now a significantly costlier experience, making alternative travel destinations more attractive.

3. Stricter U.S. Border and Visa Policies

Tighter border security and more stringent visa policies have made it more challenging for Canadians to travel to the U.S. New fees, longer processing times, and additional paperwork have all contributed to the hassle of crossing the border. The added bureaucracy has made it less appealing for Canadians to make short, spontaneous trips to the U.S. The perceived inconvenience and delays at border crossings have made Canadians reconsider their travel plans.

4. Shift in Travel Habits Post-Pandemic

Since the pandemic, Canadians have adjusted their travel habits. Instead of making frequent trips to the U.S., many are choosing to explore more domestic options or visit other international destinations that offer lower costs and simpler travel processes. Canadians are increasingly opting for nearby vacation spots, taking advantage of the variety of experiences available within Canada, or seeking out international destinations with more affordable pricing and fewer travel barriers.

5. Decreased Transportation Connectivity

There has been a noticeable reduction in air and land travel routes between Canada and the U.S., which has further complicated cross-border travel. Several cross-border flights have been cut, and the remaining services are more expensive and less frequent. On the ground, land-border crossings have seen reduced volumes, making it less convenient for Canadians to travel to the U.S. as easily as they once did. The combination of fewer flight options and higher fares has made travel to the U.S. more difficult and less attractive.

6. Increasing Competition from Other Destinations

As U.S. travel has become less appealing for Canadians, other international destinations have seized the opportunity to attract these travelers. Countries such as Mexico, the Caribbean, and various European nations have marketed themselves as affordable alternatives to the U.S. With lower costs, simplified entry requirements, and attractive travel packages, these regions have successfully lured many Canadians away from U.S. border states, further eroding the once-dependable Canadian tourist base.

Economic Consequences for U.S. Border States

The decline in Canadian tourism is having a noticeable impact on U.S. border state economies. Businesses that once thrived on Canadian visitors are now struggling. Hotels report empty rooms, restaurants see fewer customers, and local retailers note reduced sales. For towns along the U.S.–Canada border, particularly in areas like Michigan’s Upper Peninsula and North Dakota, the loss of Canadian visitors has left a significant economic void.

In 2024, Canadian tourism contributed over $20.5 billion to the U.S. economy, supporting approximately 140,000 jobs, particularly in the hospitality and service sectors. As the number of Canadian visitors declines, these industries are now facing significant financial challenges. This shift is creating an uncertain outlook for many U.S. businesses that depend on the steady flow of Canadian tourists.

U.S. border states are facing economic hardships in 2025 due to a sharp decline in Canadian tourism, driven by rising travel costs and political tensions between the two countries. These factors are significantly impacting local businesses and economies.

Navigating the Challenges Ahead

The decline in Canadian tourism is a concern for U.S. border states, but it also offers an opportunity for these regions to reevaluate and diversify their tourism strategies. While the decline in Canadian visitors is expected to continue in the short term, there is hope that diplomatic relations can improve and that travel restrictions can be eased. In the meantime, border states must look for new ways to attract tourists from other regions.

By targeting new markets, enhancing local tourism offerings, and addressing the concerns that have deterred Canadian travelers, U.S. border states can begin to adapt to the changing landscape of international tourism. With a strategic approach, these states can continue to benefit from tourism, even as the profile of their visitors evolves.