Robinson's Take: Will Tariffs Ground Your Vacation? Trade War Uncertainty Hits Travel Plans

Forget packing light – economists are suggesting travelers might be tightening their purse strings this summer as the ongoing trade war fuels a dip in consumer confidence in the U.S.
According to Robinson College of Business faculty, this growing unease could translate into fewer trips and altered travel plans, impacting everything from airline profitability to local tourism economies.

"Tariffs will impact the travel industry, but the degree to which remains to be seen. We're talking about airlines, hotels, destination attractions – the whole package, encompassing both business and leisure travel," said Debra Franklin Cannon, the director of the Cecil B. Day School of Hospitality at Georgia State University.

Consumer confidence in the U.S. already has seen a significant downturn since early 2025. The Conference Board's March data on consumer confidence underscores this concern. Their main index fell to 92.9, a drop of 7.2 points. But perhaps more telling is the plunge in their Expectations Index – how people see things shaping up in the short term. It fell so sharply, to its lowest point in twelve years, that it's now well below the level that usually suggests a recession could be on the horizon.

"Consumer confidence is down, and it impacts the likelihood to book travel," Cannon said. She added that the business travel sector, often an early indicator, is already showing signs of contraction, which can cause a ripple effect that affects consumer travel.

The meetings and conventions sector, a vital economic engine for cities like Atlanta, is also vulnerable. "Trade shows will see fewer people, which then affects caterers and the food service side. We're Atlanta, a big convention city. When we have a convention that is thriving, the whole city benefits. Attractions thrive, and attendees often bring family who spend money during the day in our malls and retail stores. The convention business is huge as an economic driver, so any downturn causes concern," Cannon said.

While the summer months traditionally focus on leisure travel, Cannon anticipates a potential softening in this segment as well. "We do think that because of consumer confidence going down, we may see fewer domestic leisure travelers. We've started to see a downward turn, and we are also expecting fewer international travelers." The reasons for a decline in international travel are multifaceted, stemming from economic uncertainties to potential political concerns in travelers' home countries regarding their investments and future prospects.

The airline industry is already reacting to this uncertainty. "We know that airlines, like Delta, have retracted their predictions in terms of profitability. The cost of building airplanes will likely increase due to tariffs, and at some point, this may impact airfare. If prices go up, passenger airfare is going up. Airlines might try to contain costs for longer than just the summer months, potentially by reducing their capacity and not having as many planes."
While economic woes may not deter business and first-class passengers from flying, more budget-conscious travelers may adjust their plans. "There are different segments of travelers, and many are more price conscious. They may modify their travel. For example, if gas prices drop, we might see more people choosing to drive rather than fly. The appeal of driving will depend on how compelling the gas prices are. People will still travel for leisure, but they might modify their trips, perhaps opting for staycations or closer resorts for a getaway."

Despite the uncertainty, Cannon points out the inherent resilience of the travel industry. "We're about to go into the season that typically has record travel. The airports will still be busy and crowded. The lack of predictability is frustrating, but hotels will likely try to absorb some increased operating prices by offering packages, like ‘stay three nights and get some freebies.’”

Cannon's final advice for travelers navigating this uncertain period is to remain informed and flexible. "I would say, keep your eyes open. Even though a trip may be booked, see what's going on at your destination. Are there better deals? In other words, keep your eye on the ball right up to the time that you're packing your bags."

Building on Cannon's insights into the operational and consumer-facing aspects of the travel industry, Denish Shah, a colleague at the Robinson College of Business with expertise in marketing and consumer insights, offered a more macro-level perspective on how the ongoing trade war might shape consumer behavior and the broader economic landscape impacting travel.

Shah emphasized that the current climate is marked by significant uncertainty, which directly influences consumer decisions. "Too much uncertainty leads consumers to overestimate their losses," Shah explained, "they tend to look at the worst-case scenario of prices going up, the possibility of a recession, and even losing their jobs. The greater the uncertainty remains, the greater will be the probability of consumers giving up on discretionary spending, and travel certainly falls into that category for many."

The trade war's influence extends beyond consumer sentiment to the very supply chains that underpin the travel industry. When asked about potential shifts in these chains and the resulting cost implications, Shah pointed to the direct impact of tariffs. "If the current administration goes forward with tariffs again in July, and if they go into motion for all the countries – China is already in action – there will be an increase in prices across the board, including increases for hotels and travel." This is due to the reliance of the travel sector on global sourcing. "Lots of supplies used in hotels and airline component parts are outsourced outside the U.S. All of that will trickle down to consumers in some form."

Looking ahead, Shah identifies key economic indicators to monitor for understanding the trade war's impact on travel. "Consumer sentiment tends to be a leading indicator. If the sentiment starts trending negative, that, in effect, motivates consumers to start tightening their purchases and not spend on anything that's nonessential."