Shares of cruise lines, including Carnival, tumbled after Commerce Secretary Howard Lutnick suggested the Trump administration would crack down on taxes paid by the companies. Lutnick stated that foreign-flagged cruise ships do not pay taxes, implying this would change under the administration.
Carnival shares dropped 5.9% following these comments, reflecting investor concern over potential regulatory changes. The Cruise Lines International Association (CLIA) countered, stating that foreign-flagged ships visiting the U.S. pay nearly $2.5 billion in taxes and fees, representing 65% of total worldwide taxes.
CLIA emphasized that foreign-flagged ships are treated the same for taxation purposes as U.S.-flagged ships visiting foreign ports, ensuring consistent reciprocal treatment across international shipping. The potential for a tax crackdown introduces significant regulatory uncertainty and financial risk for the industry.
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