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It looks like there could be more bad news on the horizon amid President Donald Trump’s tariff announcements as passengers could be hit with more expensive plane tickets.
This is as analysts are warning travellers to be prepared for sky high flight prices following Trump’s ‘Liberation Day’.
The new tariffs came into effect today (April 9) and the added cost of imports could hit the wallets of consumers.
According to a report from Business Insider, Michael Feroli, who is JPMorgan Chase’s chief US economist, wrote: “The resulting hit to purchasing power could take real disposable personal income growth in 2Q-3Q into negative territory, and with it the risk that real consumer spending could also contract in those quarters.”
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The US stock market was mixed as it opened this morning after China announced it will be imposing a further 50% tariff on imported American goods in response to Trump’s 104% tariff.
And as the stocks saw a dip earlier this week, it’s hitting airlines hard.
Both Delta Air Lines and United Airlines have seen their share prices fall by more than a third since the beginning of the year.
Meanwhile, American Airlines is down by a staggering 44%.
Airline tickets have seen their prices lowered in recent months due to less demand but according to certain analysts, this is due to change soon.
This is because tariffs are expected to be passed down to passengers in extra costs.
In a hearing at the Senate, Boeing CEO Kelly Ortberg revealed that 80% of the firm’s airplanes are sold to customers outside of the US.
He said: “Free trade is very important to us.”
Nicolas Owens, who is the Morningstar's analyst for aerospace and defense equities, said: “Investors concerned that the new import tariffs might be devastating to US aerospace firms may overestimate the risk.”
Analysts at Vertical Research Partners are also warning over anticipated airfare increases, writing: “Ultimately we see these cost increases being passed on to airlines, and the flying public, which logically will have a negative impact on passenger demand […] and airline profits.”
It’s not clear yet how the tariffs will impact airfare long term as the trade war between the US and China seems to be intensifying.
However, with budget airlines already struggling under tight margins, it looks like it could be passengers who end up paying the price.
