Arnie Weissmann
Tourism is a soft industry underpinned by hard goods: Cruise ships, airplanes, hotels, rental cars and theme parks rely on physical manufacturing, construction and imported amenities and consumables, including alcohol.
It's also a service industry whose prices are impacted by labor costs.
And it plays an important role in our balance of trade: When people visit the U.S. from other countries, every dollar they spend is counted as an export -- a positive in our balance of trade.
While there have been no executive orders with the words "tariff on travel" in them, current tariffs and emerging policy decisions amount to both increased costs and decreased revenue for travel. The indirect impact of announced tariffs for hard goods and raw materials will find its way to travel businesses and travelers. That's not good news for an industry that relies on discretionary spending.
Likewise, mass deportations without immigration reform that would allow workers needed in hospitality service roles to remain in the country will increase passalong labor costs. The topic dominated panels at the Americas Lodging Investment Summit held earlier this year.
And the leaked list of 43 countries whose citizens might fall into a travel ban category may have a knock-on effect that will make the U.S. look unwelcoming in a generalized way and slow the efforts to restore inbound travel to prepandemic levels.
It should be noted that the leaked travel ban list, split into three categories, is a draft. Of those on these tentative lists, slightly more than half would be in the "yellow" category, meaning they would be given 60 days to address concerns related to safety and security in order to be removed from the list.
The Caribbean is represented in all three categories. Four Caribbean countries are yellow: St. Lucia; Dominica; Antigua and Barbuda; and St. Kitts and Nevis. Haiti is in the orange category, where there will be sharp restrictions on the issuance of visas. Cuba is in the red category, meaning all Cuban citizens would be banned from entering the U.S.
It's not clear what criteria are being used for each particular country, though sources within the administration suggested it has to do with specific policies related to, for example, selling citizenship to residents of countries that we consider unfriendly.
I have no problem with asking countries that may have deficient security protocols to fix them. And if countries in all the three categories were given 60 days to address concerns, I suspect adversaries like Iran, North Korea, Yemen and Afghanistan wouldn't bother, and unstable countries such as Somalia, Syria, Haiti and Libya couldn't make necessary changes even if they wanted to.
But one country being proposed for the can't-enter red category is a complete head-scratcher: Bhutan. This is a country focused on "gross national happiness." It is a close ally of our close ally, India, which has given Bhutan the designation "protected state."
Developing countries dominate the three categories, and the full economic impact of a ban on all of them wouldn't, by itself, be a huge economic hit for the U.S. But Bhutan's inclusion got me thinking about an unintended consequence of banning travel from a country without giving it a chance to remediate deficiencies.
I've interviewed two of Bhutan's prime ministers over the years and discovered that both hold college degrees from the U.S. and that their worldview has been influenced in positive ways by their time spent here.
In fact, 32 current heads of state were educated in the U.S. Many tourism ministers I've met around the world received a U.S. education. Exchange students, spread throughout America, are an example of soft diplomacy at its best.
On the other hand, some recent reports related to education, visas and travel are counter-examples and raise concerns about whether this type of positive outcome will continue: Brown University and Yale Law School told students and professors holding visas allowing them to attend or teach at the schools not to leave the country during spring break.
Brown is worried that members of their community may be refused readmission to the U.S., as has already happened to one of its professors. The warning extended to green card holders.
The hard-dollar impact on outbound travel as a result of this concern may be not more than a blip, but apprehensions related to coming to or leaving the U.S. is a worrisome development for the travel industry. Potential yellow-category listee Antigua and Barbuda even felt compelled to pre-emptively issue a press release stating that there are (currently) no issues regarding travel between the islands and the U.S.
The cumulative effects of these undefined but emerging travel tariffs are not going to be good for the industry. And a return to the Fortress America mentality of the early aughts -- a chain saw rather than scalpel approach -- may ultimately prove to be counterproductive on many levels.