| I’m Chris Anstey, an economics editor in Boston. Today we’re looking at Augusta Saraiva’s reporting on the outlook for US travel services exports. Send us feedback and tips to ecodaily@bloomberg.net. And if you aren’t yet signed up to receive this newsletter, you can do so here. As Trump often reminds the public, the US has a massive trade deficit in goods. What’s often overlooked is that it’s got a significant surplus in services. While the $293 billion figure is dwarfed by the $1.21 trillion goods deficit, it reflects a whole lot of business. One part of that is US spending by foreign visitors, which reached a record $254 billion last year, according to data from the International Trade Administration. By comparison, that’s more than the combined value of goods the US imported from South Korea and Taiwan. Trouble is, signs are that this money-earner for the US is going to be curtailed this year as some international travelers decide to go elsewhere or stay at home. At least part of this is due to negative sentiment about Trump, who’s lashed out at foreign nations for a litany of reasons — including trade deficits. For example, a Canadian pension fund, Alberta Investment Management, has asked its employees to stop non-essential business trips to the US, Bloomberg reported Monday. Arrivals of non-citizens to the US by plane dropped almost 10% in March from a year earlier, the ITA said Monday. That’s as stories of harsh detentions at US airports, ensnaring travelers from countries like France and Germany, started making headlines. Almost $20 billion in retail spending from international tourists in the US may be at risk, according to a Bloomberg Intelligence analysis. Analysts at Goldman Sachs estimate in a worst-case scenario, the blow to the economy from reduced travel and boycotts could amount to a hit of 0.3% to gross domestic product. That would total $90 billion, according to Bloomberg calculations. “This headwind provides another reason — in addition to the more direct negative impacts of tariffs and drag on exports from foreign retaliation that are already built into our US GDP forecast — why US GDP growth will likely underperform consensus expectations in 2025,” Goldman economists Joseph Briggs and Megan Peters wrote in a report last month. The Best of Bloomberg Economics | - The end of the tax filing season will provide clues on how honest Americans will be about their income when fewer auditors can check.
- Chinese President Xi Jinping called on Vietnam to jointly oppose “unilateral bullying” to maintain the stability of global free trade and supply chains.
- The US is trying to counter China’s growing influence in Latin America.
- UK businesses shed workers at the fastest pace since the start of the pandemic, but households did increase spending.
- Investor confidence in Germany’s economy has plummeted. Meanwhile the financial watchdog is targeting a centuries-old payment system.
- The Bank of Japan will probably leave aside raising interest rates for now, according to a former executive director.
Amid the selloff in Treasuries last week, one narrative making the rounds was speculation that some trading partners were among those dumping US government debt, potentially as a retaliatory move against tariff hikes. While there’s a confluence of factors behind the drop in Treasuries and “it’s easy to blame the foreigners,” evidence does suggest diminishing overseas demand, according to Societe Generale analysts. China’s holdings, for example, are around their lowest since 2009. Canada’s stockpile fell over 7% in January from December. “The decline in foreign demand for US Treasuries is a paradigm shift in the demand dynamic and recent events could accelerate this trend,” the SocGen team, including Subadra Rajappa, wrote in a note. A reversal of the long-run trend of foreign purchases would lead to higher net interest costs for the US Treasury, “a key contributor to deficits projections for the next decade.” | 
