Domestic Tourism as a Response to US Protectionism

GDP figures released on Tuesday External link. showed that Quebec’s economy continued to expand modestly in April. But despite edging up 0.1% month over month, output remained 0.5% below its January 2025 peak. The trade dispute with the United States, a shrinking population and moderating public spending continue to weigh on the province’s growth.

The situation varies greatly by industry, however. While most goods-producing industries remain under pressure, several services-producing industries have been holding up well. This is especially true of accommodation and food services, as well as arts, entertainment and recreation, where activity is up 4% since the economic slowdown began a few quarters ago (graph 1).

This is likely due in part to strong domestic tourism. Even as several traditional drivers of Quebec’s economy are showing signs of slowing, tourism spending continues to support economic activity in many parts of the province. And given the recent shifts in Quebecers’ travel habits, tourism could turn out to be a standout contributor to the provincial economy this year.

Quebecers Are Spending Less of Their Tourist Dollars South of the Border

As our analysis last year External link. showed, every tourist dollar spent in Quebec directly benefits the province’s businesses, workers and governments. The change in travel habits we’re seeing is therefore noteworthy because tourism spending remains an important driver of Quebec’s economy.

Geopolitics have shifted considerably since the start of the current US administration, and Canadians have pulled back sharply on travel to the United States. In May 2026, the number of Canadian residents returning from the US was down 25% compared to two years earlier. That figure was 33% in Quebec vs. about 23% in the rest of Canada, suggesting Quebecers are staying away in larger numbers.

This pullback hasn’t been entirely offset by higher travel to other foreign destinations. Travel to countries other than the US is up since 2024 among both Canadians and Quebecers, but not enough to offset the decline in travel to our southern neighbour. Total trips abroad remain below where they were before the recent trade tensions (graph 2). Some of the tourist dollars that would have otherwise been spent abroad could therefore be spent here at home, creating an opportunity for Canadian tourist destinations.

A Possible Boon for Quebec

Quebec’s economy clearly stands to benefit from this trend. According to our estimates, if a third of the tourist dollars typically spent in the US were instead spent in Quebec, it could generate nearly $1 billion in additional economic activity, support more than 10,000 jobs and boost government tax revenues. The growing popularity of local getaways, long weekends and micro-vacations suggests that vacations closer to home may be the new norm for many travellers. This is consistent with the strength we’ve seen recently in several tourism-related industries.

Meanwhile, many parts of the US are starting to feel the effects of lower Canadian tourism. According to some estimates, revenue from Canadian tourism is down several billion US dollars. Border destinations like Maine and Michigan continue to report sharp declines in Canadian traffic. Those are tourist dollars that could be spent in Quebec instead.

2026 hasn’t been a typical year for tourism. Between Canada co-hosting the FIFA World Cup and the Montreal Canadiens making a deep playoff run, there have been plenty of opportunities for leisure spending. As several observers pointed out before the World Cup began, the net economic benefits of major sporting events are often difficult to measure since some of the economic activity is spending that would have happened anyway.

Of course, it’s too early to say whether Quebec’s strong tourism performance is due exclusively to lower travel to the United States. Household disposable income, prices, special events and even the weather all influence travel decisions.

Nevertheless, preliminary figures have been encouraging. While the World Cup seems to have mostly driven up prices in some host cities, Montreal and Quebec City continued to show robust demand. Both cities reported higher occupancy rates, with Quebec City also posting an increase in the average daily rate and revenue per available room. Montreal is an especially telling case. Some feared that since it wasn’t hosting any World Cup matches and the Grand Prix was moved up to May, tourism and cultural activity would peak in the early summer. But the data so far doesn’t bear that out. The city’s hotel occupancy rate was nearly 79% in June, up seven percentage points from last year.

Amid ongoing US protectionism and modest economic growth provincewide, where people choose to vacation is just as important to the economy as the choices they make at the grocery store. Seasons and destinations may change, but one thing remains the same: when tourism spending stays in Quebec, so do the benefits.