China-US Trade War Hits Travel Sector

Following an investigation into how Trump’s high tariffs have weakened relations and impacted tourism from Canada, China is the next country to be observed in order to better understand the wider implications of such levies. With tariffs against Chinese imports drastically increasing to eighty-four percent and a retaliation of thirty-four percent taxes on American goods, global tourism has fallen victim to political and economic tensions between two great superpowers: China and the US.

World map, highlighting USA and China — World map, highlighting China (orange) and the USA (green) © Aris Katsaris

How have China-US tensions impacted travel?

Chinese travellers are one of the world’s largest groups of outbound tourists, and make up a large portion of international visitor spending in the US. However, with higher costs for US destinations, many potential visitors are rethinking their travel plans. This could result in a sharp decline in Chinese guests to major cities in the US which depend heavily on this demographic, including the likes of New York, Los Angeles, and San Francisco. Simultaneously, American tourists will have to face the growing cost of Chinese goods and services, caused by tariffs. Price hikes will prevent tourists from booking long-haul flights, accommodation, cruise packages, and tours between China and the US – one of the most lucrative routes in the world.

Airlines, hotels, and tour operators that rely on the flow of tourism between China and the US will be heavily affected and forced to market their services in new ways. Airfares are likely to have their prices raised to offset higher operating costs for US airline carriers that use Chinese-produced aircraft parts, such as engines and avionics. Attempts to source these parts from other vendors may result in increased maintenance costs, supply chain delays, and flight cancellations. These effects are echoed by the cruise industry.

Technology – such as in-flight entertainment systems, booking platforms, and electronic check-in kiosks, – will also experience a surge in their prices and lessened accessibility. This, too, is to combat a rise in operational costs. Chinese technology suppliers are central to the production of affordable electronics, and are yet another sector that will be affected by these tariffs. This includes Huawei, Xiaomi, and Lenovo.

American Airlines aircraft © Takashi Miyazaki

What does this mean for the future?

With uncertainty on how this trade war will continue onward and how exactly these tariffs will settle, the coming months will likely see rising costs across the global tourism sector – from airfares to hotel rooms, and everything in-between. This will impact both tourists and businesses alike with reduced accessibility to travel and trade. Amidst a new unstable economic environment, visitors will shoulder the burden of high operational costs, while businesses are forced to rethink their strategies to maintain profitability and customer demand.

With Trump continuing to issue threats of further tariff increases – including a proposed levy that soars to one-hundred-and-four percent – and China on the defensive, the lasting impact of this trade war and the following international tensions remain unknown. Uncertainty is at a high, though it is clear that today’s market changes will have volatile long-term consequences, affecting varying forms of goods and services across the world. Global tourism is no exception to this, and is in for a turbulent journey, set to witness rising prices, disrupted routes, and growing financial instability.

What are your thoughts on Trump’s trade war, and how do you think this will continue to impact the travel sector? Let us know in the comments below.