Donald Trump sweeping trade tariffs on numerous countries across the globe have significant impact on global businesses. With no hope of rescinding his decision insight, President Trump has pledged to persist in advancing his trade wars.
The Trump’s administration economic plans mean a lot for individuals, as well as businesses. The hospitality industry is not immune to this impact. Trump administration imposed 20 percent tariffs on the European Union, and goods coming from the United Kingdom has been slapped with a 10 percent levy. With some countries such as China seeing tariff increase as high as 34%, the trade tariffs are projected to have profound impact on global travels.
What does this mean for tourists and industry players?
President Donald Trump’s trade policies and the ensuing trade wars have had notable repercussions on the hospitality and travel industries, manifesting in several key areas. With US stocks being the hardest hit, experts have cautioned that a new wave of global recession could be on the horizon. Jaguar Land Rover is already considering halting its car shipments to the US. The company, said in its address, that it is developing a “mid-to longer-term plans” in order to respond to the global trade policies. The Evening Standard has reported.
An increase in tariffs usually leads to higher prices for imported goods, ultimately shifting the financial burden to consumers. With consumer purchasing power being eroded, how much can they spare on leisure and travels? This question remains for analysts to address. According to Blog Post on Travelweekly, a U.S. trade war with Canada that began in February has already affected travel. “In late March, aviation data company OAG reported a decline of more than 70% in advanced flight bookings for the summer between Canada and the U.S. For each month from May through September, advanced bookings are down between 71.4% and 72.2%.” The travel weekly has reported. Interest rates may go higher. Interest rates affect the amount consumers will spend on borrowing which include credit cards, overdrafts, mortgages, etc. The inflationary pressure could make travel expenses abroad, including those in the U.S., more costly for UK and EU travelers. Travelers may have to spend more on accommodations and flight bookings.
The Trump’s tariff wars, if not curtailed, could lead to general job loss. The UK is a major exporter of goods to the United States. The UK exports to US in 2024 stood at almost £60bn. This included machinery, electronics, fishing, cars and pharmaceuticals. If companies continue to halt shipments to the U.S markets, it could result in reduced revenue, potentially leading to downsizing and workforce reductions. The multiplier effect of this is lower consumer spending, reduced business travel, strain on airlines and hotel bookings. However, the U.S. tourism sector may be among the worst hit, although the global hospitality outlook is also expected to feel the impacts. Tourist destinations that rely heavily on visitor traffic from large corporations or high-income consumers may see decreased revenue, affecting local businesses and employment.
Hotel operating costs could see possible increment. Hotels rely heavily on imported goods such as textiles, furniture, electronics, foods, etc. Tariffs increase has increased the costs of this items with supply chain being disrupted. Read more.
Hotel managers will have to deploy several strategies to optimize operations, and cope with the challenges created by the US trade wars. This include adjusting room rates based on demands. For example, if international travel reduces, offer attractive pricing for local guests to help maintain occupancy. Review operational processes to identify areas for cost-saving without compromising guest experience. This could include reducing waste, optimizing staffing levels, and renegotiating supplier contracts.
