Key Details:
On April 2nd, the U.S. announced major new tariffs aimed at cutting trade deficits. President Trump introduced two main policies:
- A 10% universal import tax on all goods coming into the U.S.
- Additional “reciprocal” tariffs ranging from 17% to 54% that target dozens of countries the U.S. has significant trade imbalances with.
The basic 10% tariff starts on April 5th, with the country-specific tariffs kicking in on April 9th.
Even though these tariffs don't directly target the travel sector, their ripple effects across the economy will create challenges for the U.S. travel industry.
Below, we break down the direct and indirect impacts on the broad U.S. travel industry—and what that means for STR hosts.
Our Take:
The Direct Effects on STRs and the U.S. Travel Industry
Fewer International Tourists
Early signs show the new tariffs and rising trade tensions are already discouraging international visitors. Tourism Economics has drastically changed its 2025 forecast, now expecting a 9.4% drop in international arrivals—almost double the 5% decline it predicted just months earlier. This completely reverses an earlier prediction of 9% growth for international tourism before the tariffs became reality.
Higher Operating Costs
Many furnishings, appliances, and supplies for rental properties are imported and are subject to the 10% import tax. Things like smart locks, security cameras, household appliances, and replacement parts will all get more expensive.
Beyond cost, a less visible impact is delays and shortages in supply chains. Hosts might have to wait weeks instead of days for replacement household items. These delays can seriously disrupt operations—potentially leading to canceled bookings if a broken air conditioner or lock can't be fixed quickly.
These supply issues, while hard to measure, will definitely increase hassles and costs for STR hosts. Hosts will need to either keep extra inventory on hand or find domestic alternatives, often at a higher price.
Investment Challenges (Volatile Mortgage Rates & Property Acquisitions):
Trump's tariffs will likely have mixed effects on mortgage rates, though the exact impact depends on broader economic conditions like inflation and recession fears. Here's a simple breakdown:
Short-Term Impact: Lower Mortgage Rates
- Mortgage rates dropped right after the tariff announcement, hitting around 6.63%, the lowest in five months. This happened as investors moved toward safer assets amid trade war and recession fears, causing bond yields to fall.
Long-Term Impact: Potential Rate Uncertainty
- Rates might become unpredictable. Tariffs can push inflation higher, potentially increasing mortgage rates over time. Ongoing high inflation may limit the Fed's ability to lower interest rates.
Property Acquisitions
- Tariffs are expected to raise construction costs by 4-6%, making new homes more expensive. This could make housing even less affordable, especially with limited existing home inventory. While lower short-term mortgage rates could boost homebuying temporarily, continued inflation and high property costs could discourage buyers in the long run.
Indirect Effects and Broader Ripple Impacts
Inflation:
Goldman Sachs projects inflation could end the year about 0.5% higher due to these tariffs. If inflation rises, the Federal Reserve may keep interest rates high (or raise them further) to control price growth.
High interest rates affect travel in several ways:
- They make borrowing more expensive (for financing a vacation or buying a rental property)
- They can strengthen the U.S. dollar, making the U.S. more expensive for foreign visitors
- They tend to slow economic growth, which hurts business travel as companies cut budgets
Offsetting Deflationary Pressures:
It's worth noting that some of Trump's policies could balance out tariff effects:
- Extended Trump-era tax cuts could boost productivity
- Deregulation may lower business costs
- Deportation of migrant workers might reduce wage pressures in service sectors
And other factors may limit inflation's impact on consumers:
- Businesses will likely absorb some costs by accepting lower profit margins
- Currency fluctuations partially offset import price increases
- Businesses had time to prepare by diversifying their supply chains and stockpiling imported goods before tariffs hit.
Domestic Travel Trends:
If the new policies lead to more inflation, people will need to spend more on basic living expenses, causing a cut back on optional spending like travel. And if economic growth slows or recession hits, Americans may delay trips or choose cheaper getaways.
However, as we discussed here: Airbnbs have weathered tough times before, and have even seen growth during down markets. "Staycations" are now popular as families choose nearby getaways instead of expensive resorts, which helps STRs. And STRs remain a top choice for budget-conscious travelers who want flexibility, kitchens, and more space for their money.
Outlook and Ongoing Monitoring
Nobody can predict the future, but these tariffs will likely cool U.S. travel and tourism in the near term. Expect:
- Fewer foreign visitors
- More cautious domestic travelers
- Rising operating costs
- Changing traveler behaviors
Indirectly, increased costs, disrupted supply chains, and economic pressures will squeeze host’s profit margins and make demand harder to predict. Some impacts will appear quickly (like rising costs), while others will emerge over months as travelers adapt and economies adjust.
Some food for thought: We may also see innovation in the short-term rental space as hosts look for local suppliers or find ways to team up to share costs. Another possibility is political: tariff policies could change if economic pain grows – scaling back tariffs would soften these impacts, while escalation (or retaliatory travel restrictions) would worsen them. All these scenarios are speculative, and we'll continue to watch for actual data to measure the real impact.
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