Aussies are traveling to the US in droves, despite Trump's strict border stance: report
According to new data released by the Australian Travel Industry Association (ATIA), travel from Australia to the US increased by 4.8 percent year-on-year and was up 8 percent in May 2025 compared to May 2024.
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Figures from the Australian Bureau of Statistics (ABS) were also up in various categories including traveling on a holiday (up 12 percent compared with last year), visiting friends or relatives (up 15 percent) or for business (up 8 percent).
It shows a solid improvement compared to April where there was a 6.2 per cent decline.
US inbound travel to Australia, however, slipped by 3.7 percent in May and remained flat year-on-year with a modest 0.6 percent rise.
'The USA remains popular with outbound travelers, but the muted inbound response highlights challenges in achieving a balanced two-way tourism recovery,' ATIA director of compliance and membership, Nina Hedges said.
Destinations Aussies are travelling to over the US
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The US continues to take a back seat to destinations like Bali, Japan and Vietnam, which lead the way as Australia's favourite overseas locations.
According to recent ATIA figures, for the year ending May 2025, outbound travel surged by 12.5 percent to 12.21 million trips, driven by a strong appetite for travel across Asia.
Standout growth included Indonesia (Bali) up 16.3 percent, Japan, up 32.4 percent, Vietnam, up 25.8 percent and China, up 26.9 percent.
3 More Australians are heading to the United States despite being previously affected by President Donald Trump's strict border policies.
AFP via Getty Images
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'Asia continues to shine as the preferred playground for Australian travellers, with Bali, Tokyo and Ho Chi Minh City topping itineraries for millions,' Ms. Hedges said.
Japan specifically continues to see a growth in visitor numbers thanks to expanded flight options and the region's strength with the AUD, allowing it to stretch further for accommodation, dining and shopping.
'Australia's love affair with America could fade'
Flight Centre chief executive and founder Graham Turner told news.com.au that in the first three months of 2025, leisure bookings to the US from Australia dropped about 12 to 15 percent compared to last year, while business travel remained 'on par'.
But he anticipated the decline to 'accelerate' for both leisure and business travel across April, May and June.
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June figures are yet to be released.
Meanwhile, Sarah Megginson, a personal finance expert at Finder, previously said perceptions of hostility and the current political climate 'could see Australia's love affair with America fade.'
She warned Australians to check their travel insurance policies carefully before going to the US as many insurers would not provide cover if you are denied entry at the border.
3 Data released from the Australian Travel Industry Association (ATIA) shows travel from Australia to the US increased by 8% in May of 2025, compared to the same time a year ago.
WILL OLIVER/EPA/Shutterstock
There's been reported cases of tourists being denied entry on arrival and at times, strip searched and thrown in prison.
It comes as the US maintains strict immigration rules with significant emphasis on border security and entry eligibility.
'With tensions rising on American soil, Australians are rethinking holidays to the US at the moment,' Ms. Megginson told news.com.au in June.
'There's growing sentiment among Australians that the potential issues that could arise when visiting the US are beginning to outweigh the appeal of visiting some of our favorite cities.
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'My husband recently got back from a week in Los Angeles, and he noticed a huge shift from previous visits: he was questioned in detail about all aspects of his trip and why he was travelling alone.
3 Data from the Australian Bureau of Statistics (ABS) also shows holiday travel to the U.S. went up by 12% compared to 2024.
AFP via Getty Images
'It was a really hostile welcome, and if travellers feel they're being treated like suspects at the border, they'll simply take their travel dollars elsewhere.'
Meanwhile, according to Finder survey results, it appears older Australians are less likely to be deterred by what is happening politically in the US, with this age group actually traveling to the States more on Intrepid trips this year than they did last year.
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Leigh Barnes, who is the company's managing director of the Americas, told news.com.au his team had increased their focus on domestic travel within the US, promoting the right products at the right time, and increasing their brand presence.
Canadians visiting the US plummets
Other visitors from other countries aren't so enthusiastic about the US with Canada – the country's biggest market for international visitors – having plummeted more than 14 percent, according to the US International Trade Administration, with almost a million fewer Canadians so far in 2025 compared to last year.
Visitors from other countries, such as China, South Korea and Germany, have also declined.
The drop in Canadian figures come as then-Canadian Prime Minister Justin Trudeau told Canadians not to spend holiday dollars in the US after Mr. Trump's talks about tariffs and referring to Canada as 'the 51st state' in February.
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He repeated that call to action until he left office in April.
Forbes reported that three-quarters of Canadians who had previously planned a trip to the US say the tariff announcements influenced their plans.
Over half (56 percent) of those who had been planning to visit the US have since decided to travel elsewhere, according to a survey by Leger Marketing of over 1,500 Canadian adults fielded mid-May.
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Tourism Economics, which forecasts foreign traveller arrivals in the states, said the US is looking at a significant nine per cent drop in international arrivals for 2025, and a drop of $US8.5 billion – $A13 billion (-4.7 percent) in international visitor spending compared to last year.
The travel data company's May report cited factors contributing to the negative outlook include Mr Trump's administration posturing and policy announcements, such as 'Liberation Day' tariffs across longstanding trade partners.
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But in California, it shot up 386% to almost $900,000, and in San Francisco County, it soared about 500% to $1.75 million, based on California Association of Realtors data. The old rules Freeing up inventory was also one of the main reasons behind the tax law change in 1997. Under the old law, when sellers made a profit on their primary residence, the tax was deferred (not forgiven) if they purchased a replacement home within a specified time and the new house cost at least as much as the sales price on the old home. A homeowner could continue rolling the untaxed profit from one house to another, as long as they kept buying more expensive homes. If and when they sold a home, all of the accumulated untaxed gains would become taxable. If they left it to their heirs, the gains up until the owner's death generally would escape capital gains tax because of the step-up in basis. The old law also let people 55 or older sell their primary home and exclude up to $125,000 (married or single) in accumulated profits, but only once in a lifetime. As a result, homeowners had to keep meticulous recordkeeping from every house they owned. Some lawmakers and academics believed the law created distortions in the market, such as discouraging homeowners from downsizing, moving into rental housing or from higher-cost to lower-cost markets as their circumstances changed. The new rules The Taxpayer Relief Act of 1997 was intended to reduce these distortions, stimulate sales, simplify recordkeeping and eliminate capital gains taxes for almost all homeowners. It exempted the first $250,000/$500,000 in profits from capital gains tax, whether or not the seller bought a new house. Profit is what's left after you subtract what you paid for the house and eligible improvements from your sales price minus commissions and other selling expenses. Taxpayers with gains under the limits generally do not have to report the sale on their tax return. Any profit over the exemption is taxed as a capital gain. The federal rate on long-term capital gains is 0%, 15% or 20% depending on income. That's lower than the rate on 'ordinary income,' such as from a job or self-employment. A large taxable gain from the sale of a home could also trigger an additional 3.8% 'net investment income tax.' A bulge in income can also force some seniors to pay substantially more for Medicare for one year. California also excludes the first $250,000/$500,000 from the sale of a primary home, but it taxes capital gains just like ordinary income, at rates up to 13.3%. Homeowners can use this exemption as often as every two years, as long as each home has been their primary residence for at least two out of five years before the sale. What happened after 1997? Initially, the new law did eliminate tax for the vast majority of homeowners, but as home prices soared, so did the number who owed tax. Between 2000 and 2003 – a few years after the rule change – only about 38,000 home sales per year nationwide, or 1.3% of all existing home sales, had gross capital gains (excluding homeowner improvements) that exceeded $500,000, according to Cotality. By the end of 2023, almost 230,000 homes or 7.9% of all home sales nationwide – and almost 29% in California – were over the limit. A study commissioned by the National Association of Realtors found that 34% of homeowners today could already exceed $250,000 in capital gains and 10% have potential gains above $500,000. Those numbers could be 56% and 23%, respectively, by 2030 and nearly 70% and 38% by 2035. 'These outdated (exemption) thresholds are already distorting the housing market and locking up inventory, and it is getting worse every year,' the association wrote. What research says Several academic studies found that the tax law change in 1997 did increase housing turnover, and may have contributed to the sharp runup in home prices from the early 2000s until 2008, when the bubble burst. The Taxpayer Relief Act of 1997 'played a significant role in facilitating the boom in the residential real estate market that began shortly after its enactment,' Pete H. Oppenheimer, then a professor at the University of North Georgia, wrote in a 2014 paper. It created an opportunity for homeowners to receive tax free income when they resold their principal residences, which made homeownership more attractive and caused the real estate market to 'expand in volume and price,' he added. It also helped 'real estate investors and professionals to achieve tax free income … by converting rental property into a personal residence.' A Federal Reserve study published in 2008 concluded that the 1997 Act 'reversed the lock-in effect of capital gains taxes on houses with low and moderate capital gains.' However, it 'may have generated an unintended lock-in effect on houses with capital gains over the maximum exclusion amount.' Its author Hui Shan found that the short-term effect was 'much larger' than the long-term effect. A 2011 paper by Andrea Heuson and Gary Painter also found that housing turnover 'increased significantly' after 1997. 'The surprising result is how broad based the change in trading behavior is, appearing across all age ranges and impacting both trading up and trading down,' they wrote. Based on his past research, Painter predicted that eliminating the tax on home sales would increase sales. When he left his job at the University of Southern California to teach at the University of Cincinnati, Painter kept his home near Long Beach and rented it out because he didn't want to pay capital gains tax, but also in case he wanted to return to California one day. It's not just capital gains tax Capital gains are not the only culprit locking up inventory. Many homeowners with mortgages around 3% are reluctant to move, now that rates are hovering around 6% to 7%. That is the 'big 1,000-pound gorilla that has reduced mobility," Painter said. And in California, many sellers would face a big increase in their property tax assessment if they sold a long-held home and bought another. Proposition 19, passed by voters in 2020, was supposed to boost inventory by making it easier for people 55 or older to transfer their assessment from their current home to a new one, thus avoiding or reducing a property-tax increase. It also made it harder for children to keep a parent's low property tax base on an inherited home. It appears that more Bay Area seniors did move after Prop. 19 took effect, at least in the first few years. But results varied by county and the effects wore off over time. In Contra Costa, requests by seniors for Prop. 19 transfers went from around 200 per year before 2020 to about 1,000 a year after two years, but since then has tapered off to around 600 a year, said Gus Kramer, the county's assessor. In Santa Clara County, Prop. 19 'has been a lot less successful than anticipated. The biggest negative by far is capital gains,' DeLeon said. Unintended consequences If Congress eliminated capital gains tax on homes, Painter believes more people would move out of California. For people contemplating a move, losing their low property-tax base 'is not an issue, but (capital gains) taxes are. This would be an opportunity to cash in on their equity,' he said. And instead of making homes more affordable, it could increase prices. 'More generous tax treatment of homes could bid up home prices on the demand side, exacerbating concerns about housing affordability,' Joseph Rosenberg , a senior fellow with the Urban-Brookings Tax Policy Center, said via email. San Francisco Chief Economist Ted Egan concurs. 'The expectation of reduced taxes upon sale would likely result in modest upward pressure on housing prices in places, like San Francisco, where profits on home sales often exceed the threshold,' he said via email. 'This in turn would lead to a modest increase in property taxes.'
