President Donald Trump has deemed Wednesday, April 2, as “Liberation Day.” At 4 p.m. ET, he will, from the White House’s Rose Garden, announce sweeping global tariffs on a myriad of U.S. trade partners. The new tariffs—which are still under works as of this morning—will go into effect immediately upon announcement. The European Union, Canada, Mexico and Australia have all reportedly vowed to reciprocate any tariffs levied against them. A separate 25 percent global tariff on auto imports will take effect on April 3.
What does all this mean—and what does it mean for travel?
Simply, The Yale Budget Lab reports that these tariffs would cost the average American household an additional $2,700 to $3,400 in expenses this year.
Already this year, according to Bank of America Institute, spend on travel and tourism-related activities are down. Through March 22, spending on lodging is around 2.5 percent below 2024 levels, with spending on tourism-related activities down by a similar percentage. Airline spending is about 6 percent down year-over-year. Bank of America Institute notes that some of this drop-off can be due to a later Easter this year (April 20) than last year (March 31)—meaning spring break travel will occur later this year—but it also said that decreased spending could coincide with the recent drop in consumer confidence, “translating into people hesitating to book trips, or considering paring them back.”
To that point, The Conference Board Consumer Confidence Index fell by 7.2 points in March to 92.9, its lowest level since the pandemic. The Expectations Index—based on consumers’ short-term outlook for income, business and labor market conditions—dropped 9.6 points to 65.2, the lowest level in 12 years (“and well below the threshold of 80 that usually signals a recession ahead”.) The cutoff date for results was March 19, around the same time the Bank of America Institute report was released.
The Conference Board found that purchasing plans to homes and cars declines, but intentions to buy appliances and electronics have gone up, as Americans are likely trying to make such purchases before tariffs are implemented and costs increase.
One positive from that Consumer Confidence Index is that Americans’ priorities have shifted, planning to spend more on travel and vacations. This is likely the case for households making more than $125,000 annually, the only group not to report decreased confidence in the most recent index. This is amplified by the fact that tariffs are a regressive tax. This means, according to The Budget Lab, that "tariffs burden households at the bottom of the income ladder more than those at the top as a share of income."
Backing that up, The Conference Board noted: “Write-in responses also showed that inflation is still a major concern for consumers and that worries about the impact of trade policies and tariffs in particular are on the rise. There were also more references than usual to economic and policy uncertainty.”
So, how will Trump’s tariffs today impact travel? Well, spend is already down this year and consumer confidence is at its lowest point in years and most economists are projecting that American consumers will pay higher prices due to the levies. It may not be as bad as the signs are pointing to, but it may be wise to brace for a bit of turbulence in the coming months.
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