Is the fear of political instability under Trump a valid reason for tourists and businesses to avoid the U.S., or is it exaggerated?

Possibly, but economics and Trump's betrayal of our allies are probably bigger reasons for foreigners not to come here. On the other hand, the TRUMPstapo seem to have no problem jailing/deporting actual Americans, so who knows what might happen to non-citizens, particularly the non-white ones?