The CTN Take: Trump’s America spells bad news for cruise
Could Donald Trump’s bullish stance on the US economy stunt the cruise industry’s short-to-medium-term growth goals? Will Payne reports
At the end of 2024, I predicted that the cruise industry wouldn’t be at the top of the US president’s agenda when he took to office. How wrong I was.
Barely two months into his second stint in The White House and he has already set his sights on the sector, threatening to crackdown on US cruise companies supposedly not paying taxes.
Appearing on Fox News last week, US commerce secretary Howard Lutnick suggested the federal government will target cruise lines who, he claims, avoid paying tax in America by registering their ships in countries with more lenient laws, despite being headquartered in the states.
Both Royal Caribbean and Norwegian Cruise Line (NCL) are based in Miami, Florida, but are incorporated in Liberia and Bermuda, respectively. Carnival Corporation, while also based in Miami, is incorporated in Panama.
The interview led to a sudden drop in stock prices for Royal Caribbean, NCL and Carnival Corporation, but analysts at Stifel Financial believe this is an overreaction. According to the firm, similar concerns have been raised in the past without leading to any significant policy amendments.
The threats are the latest in a string of so-called ‘Trump tariffs’ – a series of levies imposed on imports to the states which Trump believes will boost US manufacturing and protect jobs, as well as raising tax revenue and growing the economy.
So far, the 47th (and 45th) president has introduced and then suspended a 25 per cent tariff on Canada and Mexico while imposing – and not suspending – a 10 per cent tax on all imports from China. He has also announced proposed levies on all steel and aluminium, and indicated he would introduce tariffs on the EU.
Lutnick’s latest comments on cruise lines suggest the administration will either push for higher taxes on vessels visiting US ports or on lines operating ships registered in the US. Either way, it could be costly to a significant proportion of the cruise sector.
According to data firm Statista, in 2019 the US accounted for 48 per cent of all cruise passengers. Cruise Trade News’ recent Annual Report found that the Caribbean – which is served mainly by departures from the US east coast – was the second most sought after destination among UK non-cruisers and cruisers.
CLIA’s 2024 State of the Industry Report found that nearly half (44.2 per cent) of cruise passengers travel to Caribbean, while the US remained the biggest cruise source market with 15 million more passengers than the second biggest, Germany.
It’s unclear what impact the proposed tariffs will have on sea fares in the future. However, with the Mexican government’s recently announced plans to hike cruise passenger tax, plus the likes of Amsterdam, Bordeaux and Nice looking to impose outright bans on ships, it begs the question: why is everyone picking on cruise?
The industry continues to punch above its weight, having recovered from the pandemic with record-breaking wave periods across the sector. A far-cry from the ‘floating petri-dish’ headlines of 2020.
CLIA’s State of the Industry Report also found that in 2023, cruise contributed $168.6 billion to the global economy – a 9 per cent increase on 2019 – providing 1.6 million jobs and $56.9 billion in wages.
These figures have steadily risen since 2019, showing that despite everything being thrown at it, the cruise sector continues to provide people with exceptional holidays and inject wealth into the ports it visits.
Hopefully in years to come global governments begin to recognise the sector for the positive impact it has on port communities and travellers worldwide, rather than using it as a scapegoat for it’s own environmental and economic shortcomings.
