Unfortunately, the broad damage to the US economy caused by Trump’s tariff war and tariff talk extends to the vast services sector, which was thriving through 2024.
The service sector includes just about anything that doesn’t come out of a factory, farm, mine, or oil well. It includes retailers, restaurants, and hotels, as well as software, internet and telecom providers. There are truckers and airlines, movie studios and media companies. It’s also schools and health care providers, lawyers, and accountants.
(“This key American business sector has a massive trade surplus with the rest of the world. Its jobs are at risk in a trade war,” https://finance.yahoo.com/news/key-american-business-sector-massive-090036023.html)
We recommend reading the entire article linked above. Services are a key engine of economic growth in the US, as Mark Zandi, chief economist for Moody’s Analytics, notes in the article. The loss of service sector jobs is likely to result in a negative impact outweighing any gain from US manufacturing jobs created years down the road as a result of Trump’s sharply reducing the flow of imports with tariffs. (The full body economic blow to many American businesses will make it difficult for them to invest in creating new manufacturing jobs in the shorter term.)
BEA reports that “In 2022, the United States had a surplus on trade in services of $231.8 billion, which contrasted with a $1,183.0 billion deficit on trade in goods” (“A Profile of U.S. Services Traders, 2006–2022, https://apps.bea.gov/scb/issues/2024/05-may/0524-profile-services-traders.htm). Two years later, in 2024, the United States had an estimated goods trade deficit of $1.2 trillion. On the other hand, the services trade surplus for 2024 was approximately $293.3 billion (BEA.gov).
Here’s what that looks like, along with the total US trade deficit.
In the US, services sector total employment is about 135 million people. Trump’s tariff policy has now put several million of those jobs in jeopardy. This is likely true in all the categories of services and especially in travel and tourism and education. We have a few reading list items. But we have also been collecting anecdotes in our travels.
In education, the foreign students that attend American schools actually come here and spend money here, and many pay cash. Now we are seeing erosion in higher education because of Trump’s disastrous policy. Some schools are canceling course offerings because they do not have the revenue projected to sustain the courses without the money from foreign buyers of American education. Science conducted at US research institutions is being gutted — we lose the benefits of research, the researchers, and their students and their future contributions. College enrollment in other countries, like Canada, is rising. Trump’s policy has chased away the buyers, and they are electing to take their business elsewhere. Who gains? Foreign-based schools. Who loses? Americans.
The travel and tourism hit is huge. In Florida, we see it constantly, and it’s growing. This is especially true because Canadians are the largest cohort of foreign visitors — 3.3 million Canadian tourist visits in 2024. The fallout is not just in hotel stays or restaurants or theme parks. I hear anecdotal evidence. A Florida surgeon told me that some of the patients he sees are canceling their trips and therefore appointments with his medical practice. A fishing guide told me he had five Canadian bookings last year and only one this year. The numbers tell the same story. Airline bookings from Canada are off by 70% (“How Trump Is Torpedoing Foreign Tourism To The US—Potentially For Years To Come, Say Analysts,” https://www.forbes.com/sites/suzannerowankelleher/2025/03/27/trump-torpedo-foreign-tourism/).
The list goes on and on. The key tourist states hit hardest by Trump’s policy with Canada are Arizona and Florida. Will the voters in those states connect the dots?
I’ll stop reciting data. Any reader who is seriously interested may find plenty of it. The services sector and American businesses and consumers would fare far better if Trump just played golf and left things alone.
Here’s the question for you. Is there a way to stop this bleeding? Or is it “wait it out” until the next election cycle? Is there any spine left in the US Senate and the House of Representatives.
Maybe.
We are starting to see one Republican at a time tiptoe into the arena and speak out. To do that, they need the courage to withstand Trump’s fury. Some Democrats seem to be too busy advertising their partisan argument. So, the socialist left wing of Sanders and AOC is getting a lot of the play. What about the moderates in either party, and what about the rest of us in the middle?
We must talk about the issues and not the political party. IMO, both political parties have failed us. But we have no way to throw them all out and start over.
We do have a way to threaten the incumbents, whether Democrats or Republicans. And we do have a way to support primary challengers who have the courage to oppose Trump’s enablers.
Reading List
“Breakingviews: Trump tariffs expose US weak flank in services,”
https://www.reuters.com/breakingviews/trump-tariffs-expose-us-weak-flank-services-2025-04-29/
“China targets U.S. services and other areas as it decries ‘meaningless’ tariff hikes on goods,”
https://www.cnbc.com/2025/04/17/china-targets-us-services-and-other-areas-after-decrying-meaningless-tariff-hikes-on-goods-.html
“Travel to the U.S. from almost everywhere is falling under Trump,” https://www.washingtonpost.com/world/2025/04/18/us-tourism-travel-trump/
“America loses no matter how many tariff deals Trump cuts,”
https://thehill.com/opinion/international/5273004-trump-tariffs-economic-cost/
“Tariffs-related stockpiling boosts US goods trade deficit to record high,”
https://www.reuters.com/business/us-goods-trade-deficit-widens-sharply-march-2025-04-29
“Tariffs Will Destroy the Best Cure for the Trade Deficit,”
https://www.cfr.org/article/tariffs-will-destroy-best-cure-trade-deficit
“That little niggle in America’s services trade balance,”
https://www.hinrichfoundation.com/research/wp/trade-distortion-and-protectionism/america-services-trade-balance
“International Student Visas Revoked,”
https://www.insidehighered.com/news/global/international-students-us/2025/04/07/where-students-have-had-their-visas-revoked
“How a Trump administration crackdown on foreign students unraveled,”
https://www.politico.com/news/2025/04/25/foreign-students-visas-donald-trump-00311600
“Losing International Students Could Devastate Many Colleges,”
https://www.nytimes.com/2025/04/19/us/losing-international-students-could-devastate-many-colleges.html
“New images could change cancer diagnostics, but ICE detained the Harvard scientist who analyzes them,”
https://www.nbcnews.com/news/us-news/ice-detain-kseniia-petrova-protest-harvard-cancer-research-rcna202180
“75% of US scientists who answered Nature poll consider leaving,”
https://www.nature.com/articles/d41586-025-00938-y
