The new US commerce secretary has warned that cruise operators will pay more in taxes under the Trump administration.
Howard Lutnick made the remarks in a Fox News interview on Wednesday, leading to sharp fall in the share prices of the three majors – Carnival Corporation, Norwegian Cruise Line Holdings and Royal Caribbean Group.
“You ever see a cruise ship with an American flag on the back? They have flags of like, Liberia or Panama. None of them pay taxes,” he said.
“This is going to end under Donald Trump and those taxes are going to be paid and Americans’ tax rates are going to come down.”
His comments prompted a response from cruise industry trade body Clia, which highlighted that lines pay almost $2.5 billion in taxes and fees in the US – an amount representing 65% of the total taxes cruise comp dies pay worldwide.
Clia in North America noted that the cruise industry contributed $65 billion to the US economy in 2023 and supported almost 300,000 jobs.
“Cruise lines pay substantial taxes and fees in the US – to the tune of nearly $2.5 billion, which represents 65% of the total taxes cruise lines pay worldwide, even though only a very small percentage of operations occur in US waters,” Clia said in a statement.
“Foreign flagged ships that visit the US are treated the same for taxation purposes as US flagged ships visiting foreign ports, which provides consistent reciprocal treatment across international shipping.”
One equity research firm described the sharp cruise stock sell-off as a “massive overreaction” to Lutnick’s “misinformed” tax comments.
“This is probably the tenth time in the last 15 years we have seen a politician talk about changing the tax structure of the cruise industry,” Stifel Financial analyst Steven Wieczynski said in a note on Thursday. “Each time it was presented, it didn’t get very far.”
In comments reported by the Financial Times, he added: “Today’s weakness is a buying opportunity as we don’t believe any of this tax ‘noise’ will amount to anything material.”
Although cruise operators paid low rates of compilation income tax, they outlay “massive amounts” of port taxes, he added.