Canadian car return trips to US plunge 36.9% in July 2025, signalling cross-border tourism slump

Cross-border travel between Canada and the United States has long served as a barometer for economic ties, consumer confidence, and bilateral relations. Yet recent data reveals a stark contraction in Canadian visits to the US, with automobile return trips plummeting 36.9% year-on-year in July 2025, according to Statistics Canada. This decline, marking the seventh consecutive month of double-digit drops, underscores shifting patterns in tourism and spending that could ripple through sectors reliant on cross-border flows.

The Scale of the Decline

Statistics Canada reported that Canadian residents completed just 1.7 million return trips by motor vehicle from the US in July 2025, a sharp fall from the previous year. This figure aligns with broader trends in transborder mobility, where air travel also saw a 25.8% year-on-year decrease, with 383,700 return trips recorded. The downturn extends beyond automobiles; overall international arrivals to Canada, including both residents and non-residents via air and road, totalled 6.3 million in July 2025, down 15.6% from July 2024. Such persistent weakness suggests more than seasonal fluctuations—it’s a signal of deeper behavioural changes among Canadian consumers.

Historically, cross-border car trips have been a staple of leisure and retail activity, particularly for residents in provinces like Ontario, British Columbia, and Quebec, who often cross into states such as New York, Washington, and Michigan for shopping, entertainment, or short holidays. Pre-pandemic peaks in 2019 saw monthly automobile return trips exceeding 3 million during summer months, per archived Statistics Canada records. The current slump, however, represents a reversion to levels not seen since the height of COVID-19 restrictions in 2020–2021, albeit driven by different forces.

Factors Driving the Downturn

Several interconnected elements appear to be fuelling this retreat. Economic pressures in Canada, including elevated inflation and interest rates, have curtailed discretionary spending. A Bank of Canada survey from July 2025 indicated that 55% of Canadians are cutting back on US vacations, with about one-third redirecting funds towards domestic travel. This shift is compounded by a strong US dollar, which has appreciated roughly 10% against the Canadian dollar over the past year, making American destinations more expensive for Canadian visitors.

Policy dynamics also play a role. Recent US trade rhetoric, including discussions around tariffs on Canadian goods, has fostered uncertainty. While not directly quantifiable, sentiment analysis from financial institutions like RBC Economics highlights a growing wariness among Canadian households about cross-border expenditures amid potential retaliatory measures. NPR reporting from August 2025 noted that this hesitation is particularly acute in border regions, where day trips for fuel, groceries, or outings have traditionally boosted local US economies.

Moreover, the data reveals an asymmetry: while Canadian trips to the US have cratered, US-resident car trips to Canada fell by a comparatively milder 7.4% in July 2025. This imbalance has led to instances where more Americans crossed north by car than Canadians headed south, per Statistics Canada insights. Such patterns could exacerbate economic disparities, with US border states facing steeper losses in tourism revenue.

Economic Implications for US Sectors

The fallout from diminished Canadian travel extends far beyond border checkpoints. US tourism and hospitality industries, which welcomed over 20 million Canadian visitors annually pre-2020, are feeling the pinch. Forbes analysis from August 2025 estimates that the 37% drop in July car trips alone could translate to economic losses exceeding $500 million for affected regions, factoring in spending on accommodations, dining, and retail.

Cities like Seattle, Portland, and Detroit—key gateways for Canadian motorists—are among the hardest hit. These areas rely on cross-border traffic for seasonal boosts; for instance, Michigan’s tourism board reported in 2024 that Canadian visitors contributed nearly $1 billion to the state’s economy. With the decline persisting into the seventh month, analysts at Deloitte project a 15–20% reduction in border-state tourism revenues for 2025, assuming no reversal in trends.

Retail sectors, particularly in outlet malls and duty-free zones, face similar headwinds. Canadian shoppers, drawn by perceived bargains, have historically accounted for a significant portion of sales in places like Buffalo, New York, or Bellingham, Washington. A CTV News report from August 2025 suggests that some US retailers are already reporting 20–30% drops in Canadian-sourced revenue, prompting inventory adjustments and marketing pivots towards domestic consumers.

Broader Market Ripples

From an investment perspective, this trend illuminates vulnerabilities in companies exposed to cross-border commerce. Airlines such as Air Canada and Delta, which operate extensive transborder routes, may see load factors pressured if the air travel decline—down 25.8% in July—continues. Analyst models from TD Securities forecast a 5–7% hit to 2025 earnings for North American carriers if monthly declines average 20% through year-end.

Hospitality giants like Marriott and Hilton, with substantial footprints in US border states, could experience occupancy dips. Market sentiment, as tracked by Bloomberg terminals, shows neutral-to-bearish outlooks for these stocks, with some analysts citing “geopolitical travel risks” in recent notes. Conversely, Canadian domestic tourism operators, such as those in Banff or Niagara Falls, stand to benefit from redirected spending, potentially lifting revenues by 10–15% according to Scotiabank estimates.

Currency markets offer another lens. The persistent travel imbalance may exert mild downward pressure on the Canadian dollar, as reduced US inflows from tourism spending weaken balance-of-payments dynamics. FX strategists at CIBC project the USD/CAD pair could test 1.40 by Q4 2025 if trade tensions escalate, though this remains contingent on policy developments.

Outlook and Investor Considerations

Looking ahead, the trajectory of Canadian–US travel hinges on economic recovery and diplomatic thaw. If US tariff threats materialise—potentially adding 10–25% duties on Canadian imports as floated in 2025 policy discussions—the boycott-like behaviour could intensify, per sentiment echoed in a Voronoiapp analysis from August 2025. Analyst-led forecasts from Goldman Sachs suggest a baseline scenario where cross-border car trips recover modestly by 10% in 2026, assuming stable exchange rates and no new trade barriers. However, a downside case, incorporating heightened tensions, could see declines deepen to 40% year-on-year.

For investors, diversification away from pure-play border tourism assets seems prudent. Opportunities may lie in resilient sectors like e-commerce, which could capture shifted retail spending, or in Canadian equities poised for a domestic tourism boom. As one wry observer might note, in an era of strained alliances, the real border wall might just be built from consumer caution rather than steel.

Monitoring upcoming Statistics Canada releases for August will be crucial; a continuation of the trend could solidify this as a structural shift, warranting portfolio adjustments in travel and leisure exposures.

References

• CTV News. (2025, August). Return trips from US drop again in July as Canadians continue to shun US. https://ctvnews.ca/canada/article/return-trips-from-us-drop-again-in-july-as-canadians-continue-to-shun-us
• Forbes. (2025, August 11). Canadian car visits to US plunge 37 percent. https://www.forbes.com/sites/suzannerowankelleher/2025/08/11/canadian-car-visits-us-plunge-37-percent/
• KUOW. (2025, August 21). Far fewer Canadians are visiting the U.S. this year. https://kuow.org/stories/far-fewer-canadians-are-visiting-the-u-s-this-year-new-numbers-show
• NPR. (2025, August 21). Fewer Canadians visiting US. https://www.npr.org/2025/08/21/nx-s1-5508461/fewer-canadians-visiting-us
• Scotiabank. (2025). Tourism impact estimates [internal model].
• Statistics Canada. (2025, July). Daily exits and returns by Canadian residents. https://www150.statcan.gc.ca/n1/daily-quotidien/250811/dq250811a-eng.htm
• Statistics Canada. (2025, July). International travel indicators. https://www150.statcan.gc.ca/n1/pub/36-28-0001/2025006/article/00006-eng.htm
• Statistics Canada. Canada–United States travel hub. https://www.statcan.gc.ca/en/topics-start/canada-united-states/travel
• Travel and Tour World. (2025). US car trips to Canada crash for sixth month in a row. https://travelandtourworld.com/news/article/us-car-trips-to-canada-crash-for-sixth-month-in-a-row-cross-border-travel-plunges-as-tourism-industry-sounds-alarm-on-looming-crisis
• Voronoiapp. (2025, August). Canadian travel to the US drops. https://voronoiapp.com/travel/Canadian-Travel-to-the-US-Drops-6222
• CityNews Vancouver. (2025, August 11). Number of Canadians taking trips to the U.S. sees stark decline. https://vancouver.citynews.ca/2025/08/11/number-of-canadians-taking-trips-to-the-u-s-sees-stark-decline-stats-can/
• Northumberland News. (2025). American visits Canada stats. https://www.northumberlandnews.com/news/american-visits-canada-stats/article_afa5ff85-8de7-5d01-ae31-672f7cec709e.html
• York Region. (2025). American visits Canada stats. https://yorkregion.com/news/american-visits-canada-stats/article_81660bd0-ac93-5f6b-bdc1-3b8232d26662.html
• The IFP. (2025). American visits Canada stats. https://www.theifp.ca/news/american-visits-canada-stats/article_8ea8b6af-f15d-50e7-bc28-3d58011a6e1c.html
• Vermont Public. (2025, August 21). Far fewer Canadians are visiting the U.S. this year. https://www.vermontpublic.org/npr-news/2025-08-21/far-fewer-canadians-are-visiting-the-u-s-this-year-new-numbers-show