Trump’s Tax Guy Threatens The $168 Billion Cruise Industry (On Live TV)

As if the stock market fear gauge couldn’t get any more red… U.S. Commerce Secretary Howard Lutnick went on Fox News and basically declared war on the cruise industry’s favorite tax loophole. 

The sell-off was nothing short of a bloodbath. Royal Caribbean plunged over 11%, Norwegian and Carnival both sank around 9%, and even Viking Holdings took a 3% dip. Turns out, when you tell investors their tax-evading cash cow might actually start coughing up some change to Uncle Sam, they don’t exactly wait around to see if it’s a false alarm.

So what’s the fuss about? Well, for decades, cruise companies have been pulling off one of the greatest tax-avoidance tricks in corporate history. They register their ships under foreign flags… think Panama, Liberia, or the Bahamas… to skirt U.S. taxes, all while making billions off American tourists. Lutnick, appearing on Fox News, called them out, saying, “You ever see a cruise ship with an American flag on the back? None of them pay taxes. This is going to end under Donald Trump.”

The market, of course, lost its mind. But was this a massive overreaction? Analysts at Stifel Financial seem to think so. “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,” they pointed out, basically telling investors to calm down and enjoy their pina coladas. The reason? Rewriting these tax rules wouldn’t just affect cruise lines… it would also turn the entire cargo shipping industry upside down, and that’s a much bigger fish to fry.

Here’s another fun fact… cruise lines do pay U.S. taxes… just not the kind that make politicians happy. According to the Cruise Lines International Association, these companies already fork over $2.5 billion in taxes and fees, which accounts for 65% of their total global tax bill. Most of those taxes come from port fees, passenger charges, and other indirect costs. What they don’t pay is U.S. corporate income tax, because, technically, they’re not U.S. corporations.

Now, let’s say the Trump administration actually goes through with this crackdown. What happens next? Well, cruise companies have a few tricks up their sleeves. They could move their corporate HQs even further away from U.S. tax laws, reduce jobs in America, or… prepare yourself… start charging passengers even more.

But before you start canceling your next vacation, remember that politicians love talking tough on corporate taxes, but actually changing the laws is another story. If history is any guide, this could be just another headline that ends up being a big nothingburger. I’d expect for cruise stocks to recover just fine.

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Stocks.News has positions in Fox, Royal Caribbean, Norwegian, Viking, and Carnival mentioned in article.