Chaos as Trump tariffs drive cruise prices up – here’s how to avoid the pain

• The Australian dollar took a dive after President Donald Trump announced mass tariffs – then partially rebounded.
• A diving dollar means many things become more expensive for Aussies, including cruise fares and some on-board prices.
• If the dollar takes more damage, this could have serious consequences for Aussie cruisers.

Thanks to President Donald Trump’s trade and tariffs global war and the pressure on our dollar, your cruise, locally and internationally may well be more expensive.

The trade war between the USA and China (and with every major trade partner around the world) means a weaker Australian dollar.

Cruise lines operate and charge in American dollars and price their other markets, such as Australia, based on USD. Even if the fare is offered in Australian dollars, the fare has been determined by a conversion from US dollars.

This means that the weaker the Australian dollar, the more expensive the converted cruise fares end up being for Australians. 

Furthermore, a weaker dollar means that Aussies have less spending power when onboard cruise ships.

However, the situation is extremely unpredictable. After Trump initially announced the tariffs, the Aussie dollar took a battering, dropping below USD$0.60. However, Trump sharply proceeded to announce a 90-day pause on the tariffs and the dollar rebounded to USD$0.62. 

Predicting where the dollar will go is difficult at the best of times, but it’s especially difficult with the world being unsure of whether Trump will proceed with his proposed tariffs or not.

If he does, this would likely mean trouble for the Aussie dollar, and subsequently steeper cruise prices. However, no one knows exactly what will happen.

This week saw a slowing in bookings as Australian cruisers took stock and assessed the risks. One line, Scenic, has already offered no deposit bookings and no surcharges as a way of helping cruisers remove the risk of booking their holidays.

At SeaTrade Cruise Global, high-level cruise executives such Josh Weinstein, Carnival Corp CEO have acknowledged that the industry is facing a level of uncertainty as the trade war appears to go on.

“Companies are trying to figure out what does it mean for me? And the hard part about that is that as of now, the answer is, we don’t know.

“It just takes some time for people to get comfortable with the uncertainty.”

Ken Muskat, president at Scenic Group USA expressed a similar sentiment, calling it a “wait-and-see situation”

“We’re definitely seeing some slowdown and definitely hearing more people, less around cancellations and more just doing their research, investigating and saying, ‘OK, let me think about it for the next week or two and see what’s going on.”

However, Muskat remains positive.

“At the end of the day, going on vacation and doing experiential things that make a difference in your life is going to prevail over some of the more materialistic things that people spend money on and that’s why the industry’s as resilient as it is.”

How much could this affect your cruise fare?

How much your cruise fare will be affected will depend on how the Australian dollar continues to perform and how Trump’s tariff policy continues to play out, but even the short-term impact could cost cruisers hundreds.

If we look at a cruise such as this 10-night New Zealand cruise on Anthem of the Seas, on the American Royal Caribbean website, it is listed as starting from USD$2053. 

Now, the Australian and American Royal Caribbean websites will often have different ways of structuring and presenting cruise fares, but the Australian fare will come from the US fare.

If we look back to February this year, before tariffs came into effect, one US dollar could be worth as low as AUD$1.57. 

This would mean that a cruise fare of USD$2053 would be converted to AUD$3223, leaving that as the price for Aussie customers. 

However, the dollar changed rapidly following ‘liberation day’, with one US dollar now temporarily being worth AUD$1.68. This meant a cruise fare of USD$2053 became $3453. 

Using the Anthem of the Seas sailing as an example, this makes the fare instantly $230 more expensive, showing the effect that even a sharp and sudden drop in the dollar can have on Aussies’ consumer spending, such as cruise holidays.

However, the more serious damage could be yet to arrive. Financial analysts are worried that the Australian dollar could continue to fall.

What trouble in the US could mean for us?

Another key factor to consider is that if the USA were to enter any sort of recession, this would of course have a huge impact on the cruise industry and greatly deplete the profits of the main cruise lines.

Since the pandemic, when cruise lines of course lost huge sums of money, we’ve seen what happens to Australian cruising. Cruise capacity has been diminishing, as cruise lines have been forced to tighten their purse strings, with the ultimate proof coming in the disbanding of P&O Australia.

The simple fact is a combination of Australia’s remote location, the underperforming Aussie dollar and high regulatory costs to sail here mean that when cruise companies take a hit to their profits, it means Australia will likely see less ships.

Therefore, if the trade war does go ahead and cruise lines feel the brunt of it, this could also mean less opportunities for cruising in Australia.

Cruising overseas

Another significant disadvantage for Aussie travellers when the dollar dips is that our currency has value overseas. Therefore if the Aussie dollar is underperforming not just against the USD, but also against other currencies such as the Euro or the Yen, Aussies will also find holidays to those locations to be notably more expensive.

Data from Finder based off the changing rate of AUD from March 25 to April 8 showed that it would cost hundreds of dollars more than a holiday of about $7000 total to many popular destinations.

Therefore, Aussies looking to do classic cruises in destinations such as the Mediterranean or to see the cherry blossom in Japan will already be a few hundred extra dollars out of pocket, and will only stand to lose more if the dollar takes another hit.

For example a holiday to Europe would cost $416 more, $387 more to Bali and $427 more to Japan.

Onboard spend

A huge part of cruise lines’ revenue comes from onboard spending, with general estimates being about 30-40% of total revenue. This figure refers to the money the cruise lines earn from shore excursions, specialty dining, casinos, non-included activities, and more onboard expenses that passengers incur.

While on cruise lines such as Carnival, Aussies spend in AUD, cruise lines still measure their profits in USD. This means if the Australian dollar diminishes in value, even if Aussies keep spending the same amount onboard, the cruise lines will actually be receiving less. 

This in turn, could have the effect of cruise lines needing to further raise prices in order to make up for lost profits. 

Furthermore, on cruise lines such as Disney Cruise Line and Royal Caribbean, where onboard spend is in USD, if Aussies lose a bigger chunk of their money when converting their money from AUD to USD, they’ll be left with less left to spend onboard, once again meaning reduced profits for the cruise lines. 

As we’ve seen with Australia’s general dwindling of cruise capacity, profitability is key for cruise lines and they simply won’t sail as many ships here if there isn’t money to be made.

The New Zealand cruise association also recently said they believe the lagging AUD and NZD are partial reasons for the lack of cruise ships coming to New Zealand.

Therefore, a struggling Australian dollar could mean not only steeper fares, but also fewer ships and cruise capacity here in Australia.

Five ways to try and avoid the pain

Book and Pay in Local Currency where possible: Prioritize booking flights and accommodation offered in Australian Dollars. This locks in the price and removes the USD conversion risk for those major expenses.

Consider a Prepaid Travel Card: Load a prepaid travel card with the estimated amount you’ll need in USD (or the destination currency) when the exchange rate is favourable. This fixes the exchange rate for the funds on the card. Be mindful of fees associated with loading and using the card.

Monitor Exchange Rates and Buy Currency Gradually: If you anticipate needing a significant amount of USD cash, track the AUD/USD exchange rate. Consider buying smaller amounts of USD over time when the rate dips favourably, rather than converting a large sum all at once.

Look for Package Deals: Sometimes, holiday packages (flights + accommodation + activities) offered by local travel agents can provide some protection against currency fluctuations as the price is often fixed in AUD at the time of booking.

Budget for Contingency: Acknowledge that some fluctuations are unavoidable. Add a buffer (e.g., 5-10%) to your overall holiday budget to account for potential unfavourable exchange rate movements for smaller expenses or unexpected costs incurred while overseas.