Hemlock woolly adelgid (HWA) is an exotic insect pest causing severe decimation of native hemlock trees. Extensive research has been conducted on the ecological impacts of HWA, but the exact physiological mechanisms that cause mortality are not known. Water relations, anatomy and gas exchange measurements were assessed on healthy and infested eastern (Tsuga canadensis) and Carolina (Tsuga caroliniana) hemlock trees. These data were then used in a mechanistic model to test whether the physiological responses to HWA infestation were sufficiently significant to induce changes in whole-plant water use and carbon uptake. The results indicated coordinated responses of functional traits governing water relations in infested relative to healthy trees. In response to HWA, leaf water potential, carbon isotope ratios, plant hydraulic properties and stomatal conductance were affected, inducing a reduction in tree water use by > 40% and gross primary productivity by 25%. Anatomical changes also appeared, including the activation of traumatic cells. HWA infestation had a direct effect on plant water relations. Despite some leaf compensatory mechanisms, such as an increase in leaf hydraulic conductance and nitrogen content, tree water use and carbon assimilation were diminished significantly in infested trees, which could contribute to tree mortality.