Tariffs on Canadian goods coming from the U.S. have stirred up a fair bit of economic unease. The Canadian dollar has slipped against its U.S. counterpart, which, in most cases, can slow growth—but oddly enough, it might lift Canadian tourism. A softer dollar means international visitors find Canada more wallet-friendly, while it also holds back Canadians from traveling abroad so much.
Looking at what boosts Canadian tourism, here’s a rough breakdown: transport gets about 21% of the contribution, lodging sits at 27%, meals and drinks bring in 16%, and other activities cover around 36%. All these bits together form roughly 1.55% of the nation’s GDP. Interestingly, in the first three quarters of 2024, nearly 669,000 Canadians worked in tourism – about 3.3% of the country's workforce.
When it comes to demand, tourism rides on both local and international interests. Given Canada’s close ties with its southern neighbor, it isn’t too surprising that most visitors come from the U.S. In 2023, almost 78% of visitors coming over were American, although their spending made up only about 50.7% of the total. Likely, this is because many Americans stick around only for quick day trips. Ontario led the way as the top spot, drawing roughly 47% of international visitors between January and November 2024, with British Columbia and Quebec following behind. Interestingly, while foreign visitors are vital, around 76% of tourism business demand comes from Canadians.
Now, thinking about what lies ahead in 2025, the picture is mixed yet cautiously hopeful. Canadian tourism enjoyed stable growth for a good decade before the pandemic hit hard, and even though travel is back on track, things haven’t quite bounced back to pre-pandemic levels—there’s potential for a revival next year, though. The exchange rate plays a key role here too. A weaker Canadian dollar lures more U.S. tourists since travel to Canada becomes even more affordable, while it bumps up costs for those Canadians planning trips overseas. This situation tends to nudge locals into exploring their own backyard a bit more.
For over 40 years, there’s been a noticeable trend: when the U.S. dollar rises in value, foreign tourists often spend more—and quite frankly, fewer Canadians head abroad when the U.S. greenback is strong. That said, the exact effect on Canada’s tourism revenue still isn’t crystal clear. Domestically, tourism seems to lean more on overall business cycles than on just the currency’s ups and downs. So, even though a softer Canadian dollar might make international trips less appealing, how much Canadians spend on homegrown tourism really depends on how the broader economy is doing.
In a nutshell, there’s a kind of cautious optimism for Canadian tourism in 2025. A devalued dollar could very well act as the spark to bring more foreign visitors and get them to spend more time (and money) here. Still, the final outcome will largely hinge on the overall performance of the Canadian economy. Domestic trips by Canadians form the backbone of this field, so if local travel slows down, the sector might really feel the pinch. In these uncertain economic times, many folks seem likely to tighten their wallets regarding domestic spending. Still, looking ahead to 2025, it appears that a surge in international visitors could very well give the industry a much-needed boost.