Forecasters from the National Hurricane Centre warned of "large and damaging waves" from the storm, which is expected to make landfall in coastal North Carolina's popular Outer Banks area by yesterday afternoon.
At 1500 GMT, Arthur was 110 miles (175 kilometres) southwest of Cape Fear, North Carolina, moving toward the northeast at 14 miles (22 kilometres) per hour.
Governor Pat McCrory said emergency preparation efforts have been made more complicated by the arrival of thousands of tourists, who have flocked to North Carolina's beaches for the annual summer holiday pilgrimage.
Emergency declarations were issued by several counties in the southern state, which opened emergency shelters and ordered evacuations in low-lying areas.
"As the hurricane moves north, more counties are likely to declare a state of emergency," McCrory said.
The Miami-based NHC said Arthur could cause ocean surges of more than five feet (1.5 metres) in some areas of North Carolina.
McCrory urged residents and tourists to use common sense, to stay out of the water and out of harm's way.
"Let's hope for the best, pray for the best, that Arthur clears out quickly so we can all get back to celebrating our country's independence, with our families and friends on North Carolina's beautiful beaches."
Through today, rainfall of up to six inches (15 centimetres) is expected in coastal areas of North Carolina.
News reports said that as many as half a million visitors had been expected in the coastal Carolinas for the national holiday, the region's biggest tourist weekend.
The storm threatened to scuttle traditional Independence Day weekend picnics, parades and fireworks displays for millions of Americans along the East Coast, as far north as New England.
The storm is the first of the Atlantic hurricane season, which started on June 1 and runs through November 30.
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