If we’ve learned anything in the past few weeks, it’s that nothing seems out of the question when it comes to government actions with the second Trump administration.
It’s been a whirlwind of activity across all levels of government. But perhaps nothing — and there have been some non-stop doozies — has created as many headlines as tariffs.
In the span of just weeks, the administration has threatened, enacted or placed and then paused tariffs on Colombia, Mexico, Canada, and China. The on-again, off-again nature of the tariffs has caused confusion among many. And while there’s certainly more to come in this story, cruise passengers may be interested to know how these tariffs could impact their vacation, if at all.
What Could Be Impacted Based on What We’ve Seen so Far
We will be blunt in that it’s impossible to know what tariffs, taxes, or other levies may be put into place by either the United States or other countries. And at this time we don’t know of any changes that directly impact cruise passengers. However, as you’ll see below that could change. The following areas may end up in the crosshairs during a trade war.
De Minimis Tax: Perhaps you’ve taken a cruise before and brought home a bottle of tequila from Mexico or some cigars from the Dominican Republic. Bringing home a small amount of these items is no big deal and there is usually no import tax for them assuming they are in an amount for personal use and under $800 in total.
This is allowed under what’s called a “de minimis” treatment. Essentially, low-priced items from other countries aren’t worth the administrative hassle of collecting the tax, so they are let through freely. However, go above that amount and you may have to pay to bring goods into the country.
Already the Trump administration announced it was targeting this de minimis treatment for items from China. This was then quickly paused to maintain the status quo.
At this point there is no telling what might happen, but with the de minimis treatment already on the radar, it’s not a stretch to see it apply to goods brought back to the U.S. from Mexico or Canada should tariffs be put in place.
Panama Canal: The Panama Canal is arguably the most important waterway on the planet. It’s also in the crosshairs of the new administration. Donald Trump has repeatedly discussed the United States taking back the canal, which was transferred to Panama in 1999.
Needless to say, Panama isn’t exactly eager to give back control of the waterway that contributes about 20% of the government’s annual revenue. Tensions have already risen and a war of words is underway.
If tensions were to escalate, it doesn’t seem far fetched to think cruise ships may be caught in the middle. For instance, one tactic could be placing higher fees for transiting the canal from a U.S. departing ship, increasing the cost for American cruisers on trips through the canal.
Passenger Fees: Should a full-blown trade war erupt with countries like Mexico or Canada, it could be cruise passengers that pay a big price. Due to U.S. law, foreign-flagged vessels (which almost all cruise ships are) must stop in a foreign port before returning to the United States. On trips to Alaska, that means a stop in Canada. And Mexico is one of the most popular cruise destinations on the planet.
These ports charge fees for docking, which you pay with your cruise. Even before Trump’s inauguration, Mexico passed a $42 per passenger fee that is currently paused until summer. It’s not far-fetched to imagine the countries making it more expensive for U.S.-based ships to dock as a tool to influence American opinions on any tariffs.
This could especially be a powerful tool for Canada. When sailing to Alaska, there is no other alternative country for docking, meaning it would be difficult to avoid paying a higher fee.
What Could Help Cruise Ships Avoid Being Caught in the Middle
To be sure, no one knows how the threat of tariffs will play out. We’ve already seen a dramatic back and forth with some being announced and the paused.
But if it were to happen, there are some things working in cruising’s favor.
Cruise Ships Can Move: One of the best places to be during hurricane season is on a cruise ship. That’s because ships can move in order to avoid storms. The same could happen in the stormy international relations become a full-blown hurricane. If a country were to raise fees or take some other position against the interest of American passengers, then cruise ships could adjust itineraries to avoid these places.
For instance, when Russia attacked Ukraine, cruise ships immediately dropped Russian ports like St. Petersburg from their routes.
Ships Provide Economic Benefit: Perhaps the biggest safeguard for cruising is the economic benefit they can provide to ports of call. When three or four mega ships port in a single day in a port like Costa Maya in Mexico, it brings the spending power of tens of thousands of passengers to the area. The risk of disrupting that flow of passengers could have real impacts on the local economies of cruise ports and may cause countries to think twice before targeting them.
Foreign Flagged: While it’s easy to think of a cruise ship sailing from Galveston or Miami as American, in fact, cruise ships are internationally flagged. Almost no major cruise ships are actually U.S.-based. Instead, they are usually registered under a “flag of convenience,” such as Panama. In that case, any sort of tariffs or taxes placed on American assets actually wouldn’t apply to cruise ships.
That’s not to say that countries couldn’t still put restrictions specifically on cruise ships sailing from the United States, but since ships technically aren’t American, it could keep them from being caught up.
No Changes Yet… But a Cloudy Future
The bottom line right now is that there is no telling where the weeks and months ahead may take tariffs and trade. The past few weeks have been unprecedented and there’s no reason to think it will stop anytime soon. Given the amount of uncertainty, we’re not making any changes to plans to sail. But we are staying aware that if trade wars to happen, it’s possible the cruise ships full of Americans could feel the impacts.
