On-again, off-again tariffs and their toll on travelers

The travel industry doesn’t know what to expect from whipsawing U.S. policies. But concerns are hitting the bottom line, which could mean higher prices, and more confusion, for tourists

The Trump administration’s shifting tariff policies have caused global economic turbulence, significantly impacting the travel industry. Although a 90-day suspension of reciprocal tariffs has temporarily eased tensions, the industry remains affected by weakened consumer confidence, increased costs, and traveler uncertainty.

Key takeaways

• Currency impact: The dollar has weakened slightly but remains favorable for Americans abroad, especially in Canada and Mexico. Retaliatory tariffs may undermine any initial positive impact of U.S. tariffs on the dollar.
• Airline industry strain: Tariffs raise aircraft production costs, but economic uncertainty is the bigger issue. Airlines are seeing reduced demand, especially among budget-conscious travelers. Carriers like Delta are trimming capacity; low-cost airlines are especially vulnerable.
• Hotel industry challenges: Tariffs increase the cost of imported goods, raising hotel operating expenses. Labor shortages due to immigration policies may limit hotel capacity. New builds and renovations may slow due to rising costs.
• Shift toward domestic travel: Despite economic worries, most Americans still plan to travel. Many are opting for closer-to-home destinations and more affordable travel options. High-end travelers may continue as usual, but middle-income travelers are adjusting plans.

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