AIRLINES & ALLIANCES

Trump’s 2025 Tariffs Shake Core Consumer Industries: Airlines, Hotels, Retail, and Auto Loyalty Programs Impacted

While framed as a push to revive American manufacturing and reduce trade deficits, the decision has had significant implications for major sectors of the U.S. economy—especially airlines, hospitality, retail, and the automotive industry. The article analyses the potential effect on major players.

GLO

In a sweeping move that has triggered global trade ripples, President Donald Trump reintroduced aggressive tariffs in 2025 targeting foreign imports, particularly vehicles, consumer electronics, textiles, and industrial goods. While framed as a push to revive American manufacturing and reduce trade deficits, the decision has had significant implications for major sectors of the U.S. economy—especially airlines, hospitality, retail, and the automotive industry. The step likely to be met with reciprocial tarriffs by the EU, Canada and other large trade partners of the USA. 

1. Airlines and Travel Sector

The aviation industry, although not directly targeted by the tariffs, is experiencing collateral damage through increased costs of imported aircraft components, reduced international travel, and potential retaliatory trade restrictions on U.S. carriers abroad.

Impacts:

• Rising costs for aircraft manufacturing due to tariffs on aluminum, steel, and electronics.

• Lower inbound tourism numbers due to global backlash and weakening consumer confidence.

• International travelers shifting away from U.S. destinations, reducing airline profitability.

Main Players Affected:

• Delta Air Lines – Facing higher costs for Airbus aircraft assembled with foreign parts.

• United Airlines – Experiencing booking declines on transatlantic and transpacific routes.

• American Airlines – Warning of potential fare increases to offset rising operational costs.

• Southwest Airlines – Benefiting slightly from more domestic travel amid international uncertainty.

2. Hotels and Hospitality Industry

Hotels are facing fewer international guests and rising costs for imported goods (e.g., electronics, fixtures, linens). Major chains are warning investors of declining international occupancy rates and increased renovation expenses.

Impacts:

• Decline in international guests, especially from China, the EU, and the Middle East.

• Rising refurbishment and supply costs as hotel operators import fixtures and electronics.

• Loyalty program participation could dip as global members reduce U.S. travel.

Main Players Affected:

• Marriott International – Reporting a drop in bookings from Asia and Europe.

• Hilton Hotels – Seeing delays and cost overruns in new hotel developments due to imported materials.

• Hyatt Hotels – Flagging international group bookings amid political tensions.

• Airbnb – Some increased domestic use, but international travel drop is hurting urban listings.

3. Retail Sector

Retailers have been hit especially hard, with tariffs applied to apparel, electronics, footwear, and household goods imported from countries like China, Vietnam, and Mexico. Retailers are caught between shrinking margins and the pressure to avoid passing costs onto consumers.

Impacts:

• Price increases across electronics, apparel, toys, and household goods.

• Reduced consumer spending as inflationary pressures mount.

• Inventory challenges and delays in product rollouts due to new customs requirements.

Main Players Affected:

• Walmart – Warns of higher prices for over 10,000 products due to increased import costs.

• Target – Struggling to absorb tariffs on clothing, home décor, and furniture.

• Best Buy – Faces margin pressures on imported electronics like TVs and smartphones.

• Nike & Adidas – Experiencing higher production costs on footwear and apparel made in Asia.

4. Automotive Industry

The auto sector was directly hit with 25% tariffs on foreign cars and components, targeting European, Korean, and Japanese manufacturers. The tariffs affect not only imports but U.S. automakers relying on global supply chains.

Impacts:

• Car prices increasing by $4,000 to $20,000, especially for luxury and imported vehicles.

• Automakers scaling back production, delaying model launches, and cutting jobs.

• U.S. dealerships facing reduced inventory variety and slower sales cycles.

Main Players Affected:

• Ford – Announced temporary layoffs at plants due to higher parts costs.

• Stellantis (Chrysler, Jeep) – Pausing factory lines on affected models.

• Volkswagen – Raising U.S. prices across several lines including Audi.

• BMW – Warns U.S. tariffs could affect future production plans in South Carolina.

• Tesla – Unaffected directly by imports, but warns of higher battery and tech component costs.

5. Loyalty Programs and Consumer Behavior

Loyalty programs themselves haven’t been directly targeted, but the cascading effects from the tariffs may diminish consumer engagement. Reduced discretionary spending, fewer international trips, and rising prices are discouraging the use of loyalty points or subscriptions.

Impacts:

• Consumers conserving points or deferring travel/reward redemptions due to uncertainty.

• Reduced global travel hurting participation in airline and hotel loyalty programs.

• Retail loyalty engagement down as price sensitivity rises.

The largest US loyalty program operators can be affected: 

• Marriott Bonvoy – Less redemptions by international members.

• Delta SkyMiles – Redemption rates falling on long-haul flights.

• Amazon Prime – Facing pressure as inflation affects perceived value.

• FordPass Rewards – Users delaying vehicle maintenance/redemptions.

Source: GLO