Cruise Stocks Fall on Lutnick's Tax Proposal

Shares of major cruise lines, including Carnival, Royal Caribbean, and Norwegian Cruise Line, plummeted after U.S. Commerce Secretary Howard Lutnick announced plans to end tax loopholes that allow cruise companies to avoid U.S. taxes by registering ships under foreign flags. Lutnick stated that the Trump administration aims to ensure these taxes are paid, suggesting that increased tax revenue could lower rates for American citizens. The announcement led to stock declines between 6.4% and 11% for cruise operators. Despite this, analysts like Steven Wieczynski from Stifel Financial consider the sell-off an overreaction, noting similar proposals have not advanced in the past. The industry faces additional pressures from rising fuel costs and weakening demand in regions like California and Canada. Analysts warn that the proposed tax changes could lead cruise lines to relocate their headquarters outside the U.S. to avoid higher taxes.