Maine could see a 25% drop in Canadian tourists this year because of economic insecurity, the prospect of higher prices driven by new tariffs and lingering animosity over President Donald Trump’s talk of annexing Maine’s northern neighbor, the state’s top tourism official said Friday.

In a typical year, about 900,000 Canadians vacation in Maine, supporting local economies in communities like Old Orchard Beach, said Carolann Ouellette, director of the Maine Office of Tourism. But she expects to see 225,000 fewer visitors this year because of federal policy changes and political rhetoric that have upended relations with Maine’s northern neighbor and most important trading partner.

That drop is likely to be part of a larger decline in international visitors more broadly. Ouellette had expected an 8.8% increase in international visitation, but now she expects it to drop by about 9.5%.

Canadians account for about 5% of Maine’s overall tourist visits, but they are a vital piece of the market for some communities and businesses.

“Anecdotally, we are hearing stories about cancellations that are occurring,” she said. “It’s a very mixed impact across the state. In some areas and some properties, this is critically part of their visitor base overall in Maine.”

Ouellette’s sober assessment comes as state lawmakers are grappling to understand how Trump’s first few months in office will impact the state revenues.

In addition to the tariffs announced this week, Trump has worked to slash federal spending and the federal workforce, and his administration has been threatening to pull other funding from Maine because of an ongoing dispute with state officials over transgender athletes and diversity, equity and inclusion policies.

The state’s independent, nonpartisan economic forecasting commission met this week and made modest downward adjustments to income projections and increasing expectations of inflation. But it remains unclear which of Trump’s policies, especially his sweeping tariffs and his efforts to cut federal grants from Maine, are here for the long haul.

That economic outlook is a key component for the nonpartisan panel trying to provide the Legislature with a revenue forecast so lawmakers know how much — or how little — additional tax revenue they will have to support state programs and services. The Revenue Forecasting Committee is expected to meet April 28 and deliver its report to lawmakers by May 1.

Sheena Bunnell, a professor of business economics at the University of Maine Farmington and chair of the Consensus Economic Forecasting Commission, said the state and national economies have strong foundations that will likely withstand the effects of Trump’s new tariff regime in the long term and that they could even prosper if companies bring manufacturing operations back to the U.S., as the administration hopes.

But Bunnell also criticized Trump’s “sledgehammer” approach to tariffs as a “very painful way” of resetting the economy and predicted that Maine residents and business could experience financial pain and uncertainty in the short term.

Expectations for short-term pain is reflected in the stock markets, which this week experienced their largest declines since the COVID-19 pandemic shut down the economy. And the countries targeted by Trump’s tariffs are already announcing retaliation, escalating the global trade war.

RIDING OUT THE STORM

But Maine’s economy has weathered similar storms in the past, Bunnell said.

“We have been through pretty tough times in the past, including the financial crisis, COVID and now this. So we’ve had three shocks since 2007, and we have done fine,” she said.

It’s unclear, however, how long that short-term uncertainty and pain will last. Bunnell predicted uncertainty about the direction of the economy could last six months or so, but Trump himself has indicated it could take two years before the U.S. could see a resurgence in manufacturing resulting from the tariffs.

Even six months of uncertainty would be hard for Maine tourism businesses to swallow.

“That six months of uncertainty is our prime travel season,” Ouellette said.

Republicans on the Legislature’s Appropriations and Financial Affairs Committee, which heard presentations Friday form tourism officials and the state economist, were more optimistic that Maine would weather the drastic changes in federal policy, especially in terms of tourism. They expect tourists from other states, as well as locals, will fill the void being created by a drop in Canadian tourists.

Rep. Amy Arata, R-New Gloucester, said she was looking forward to a summer with fewer tourists.

“I’ve lived in Vacationland most of my life and often during the best time of year I can’t find a room anywhere and the beaches are crowded, there’s no parking,” Arata said. “So, on the bright side, I look forward to taking my family and having some staycations in Maine … and I think that other Mainers will do the same thing.”

Filling the gap with tourists from other states may not be easy.

Ouellette said that the overall drop in international tourism will cause larger states, including New York, Florida, California and Texas, to also ramp up marketing efforts aimed at U.S. tourists.

About 80% of tourists drive to Maine, and other states will be targeting the same travelers in the greater New England and mid-Atlantic areas, she said.

“Everyone targets that market heavily,” Ouellette said. “So it will be a very competitive landscape, particularly with destinations up and down the East Coast looking to target that same drive market.”