INSIGHTS
How changing tariffs could impact business travel expenses
It’s 2025, and economic uncertainty, tariff U-turns, and trade tensions are creating new pressure points for corporate travel budgets.
While it might seem like something only procurement and supply chain teams need to worry about, recent changes, particularly by the United States (U.S.), are starting to hit corporate travel programs in ways many didn’t anticipate. For those responsible for corporate travel management, the unpredictability in the air has some wondering how to stay ahead.
Tariffs making their way into daily dialogue
Corporate travel has always been vulnerable to macroeconomic shifts, but lately, it feels like the weather changes hourly. After years of smooth(ish) trade, tariffs are making headlines. The United States introduced sweeping changes, including a flat 10% import tax and a hefty 145% tariff on goods from China. As a result, the average U.S. tariff rate reached its highest level since the 1930s. Naturally, major trading partners, China and the European Union (EU), responded, introducing their own regulatory measures. Just when you thought you'd get the picture, it changed again. Trump's tariffs were ruled illegal, then temporarily reinstated within the same 24 hours.
If nothing else, this back-and-forth makes one thing clear. The likelihood of the tariff impacts disappearing altogether remains low. And although the intent of all of these recent moves was to protect domestic industries and reduce reliance on foreign supply chains, the fallout could be felt far beyond the factory floor.
The impact on business travel isn’t obvious, until it is
At first glance, tariffs and travel might not seem linked. But scratch the surface, and it becomes obvious. Global travel providers, airlines, hotels, etc., often operate in a deep global supply chain web. So, when those links get disrupted, finically or operationally, it affects the cost-of-service delivery, and ultimately, the price paid by the consumer (aka, you).
Airlines & transport
The proposed 25% tariff-for steel and aluminium into the US will ramp up aircraft production and maintenance costs. These factors, combined, can result in higher airfares, reduced route availability, or service changes in specific markets. Rental car companies could be in a similar spot. Many vehicles or parts they rely on are now subject to steep tariffs. Potentially driving up the cost of daily hire, particularly companies that rely on imported models.
Hotels & accommodation
Hotels won’t be immune either. Linens, appliances, furnishings, tech, you name it. If it’s imported, it’s impacted. As operating expenses rise, so do room rates. In the US, some properties are absorbing these costs, while others are adjusting pricing models, scaling back guest perks, or reprioritizing upgrades.
Currency swings
Economic instability also tends to trigger wider market reactions. Exchange rates can fluctuate in response to investor anxiety, fluctuating supply and demand, and market volatility. All putting downward pressure on currencies and exchange rates. Since late 2024, the Canadian dollar has dropped by over 8%, while the Mexican peso has fallen nearly 30%. For travel programs that span multiple currencies, this volatility can result in unexpected holes in even the best thought out budget and program.
The mood is changing
As global trade tensions increase, the sentiment around business travel is shifting. As Michael Cox, Principal Consultant at FCM Consulting, explains, the biggest disruptor right now isn’t only potential cost changes. It’s actually the unpredictability of it all.
“Uncertainty is the biggest thing. We’ve seen downturns in business travel before after big global shocks like 9/11 or COVID. Once they happened, they couldn’t unhappen. But this one feels different. It’s impulsive. Decisions are being made and then reversed. Creating a different kind of worry.”
While some companies are taking a wait-and-see approach, others are adjusting. According to the Global Business Travel Association (GBTA), many buyers are reprioritizing essential travel, focusing on travel that drives revenue and strengthens relationships.
"Some businesses are deliberately avoiding the topic. They're just getting back to normal after COVID, and people are exhausted by the idea of yet another wave of disruption. Countless people within the industry are unsure of how or if they should respond. But it doesn't feel like this is instability going away anytime soon." Michael adds.
In 2025, it is estimated that international visits to the U.S. will see a modest decline of around 9% compared to the previous year. However, there's still a great deal of optimism within the industry. Many buyers are exploring alternative markets and finding ways to ensure corporate travel remains a key driver of success in the global economy.
Business travel is still the gateway to global trade
As much as tariffs are changing the trade landscape for now, corporate travel is still the key to unlocking new opportunities. As Melissa Elf, Chief Operating Officer, Flight Centre Corporate, points out.
“Business travel has played a pivotal role in economic development for centuries, with the only constant being change and opportunity. President Trump’s global tariffs are no different and offer both, where international borders can be lucrative new avenues, rather than obstacles.”
Mel explains that while tariffs could complicate trade, business travel worldwide is the key to mitigating these barriers by unlocking new markets, foreign partners, alternative sourcing, and diversifying presence. “Flourishing markets in Southeast Asia and Africa, for example, can now be seen as opportunity regions for U.S. corporations.” Added Mel.
What businesses can do
You can’t control macroeconomic conditions. But you can control how prepared you are for it. FCM Consulting recommends the following focus areas:
Reassess travel purpose. Be deliberate. Prioritize trips that support revenue, customer relationships, or operational continuity. Review internal travel for potential consolidation.
Re-evaluate destination risk. Countries facing major trade shifts may also present political or operational risks. Choose locations with lower exposure to trade tension, stable infrastructure, and transparent border regulations.
Make safety a priority. Some employees may feel uneasy about travel due to visa restrictions or geopolitical tensions. Consider employee sentiment, psychological safety, and security in travel decisions. “If you’re moving people for business, make sure they’re safe,” Michael says. “Understand who your more anxious travelers are, especially those on different visa conditions.”
Diversify supplier networks. Expand your network to include domestic hotel brands, regional airlines, and car hire options that aren’t exposed to global instability.
Think like a consultant. Michael encourages travel leaders to stay plugged into the landscape and step into a more strategic role. "Use your influence skills. Bring data, supplier updates, and even headline news articles into your internal discussions. A really good travel manager is an internal consultant who helps the business see risk and opportunity clearly and backs advice with insight.
What is happening in the U.S. right now is being reported all over the world, by some of the most influential media outlets. Which means your CFO and CEO are reading about this stuff daily."
Leverage technology and data. Use travel management software and reporting to track spending patterns, identify cost-saving opportunities, and optimize travel itineraries.
Renegotiate with vendors. With softening demand in some markets, there may be room to improve rates or secure more flexible contract terms. “There’s already been a real reduction in international leisure travel into the U.S., which, ironically, creates an opportunity for corporate travel. Hotels in key markets that usually rely on leisure traffic are suddenly looking a bit empty. That means it’s a great time for businesses to be opportunistic and renegotiate hotel rates," adds Michael.
He also points out that eventually, airlines may start reducing capacity to cope with falling demand. That will create pressure on availability and cost. “Travel is one of the most containable expenses. It’s a lever you can pull quickly for significant impact. But you need a clear plan and a seat at the strategy table.”
Modernize travel policies. Traditional, tight travel policies don’t hold up well in shaky conditions. Instead, dynamic policies that adjust based on real-time pricing, availability, and market conditions help maintain flexibility. That could mean encouraging rail over air in certain markets, adjusting per diems in response to exchange rate trends, or changing preferred suppliers as new cost data comes in.
Align cross-functional teams. Travel doesn’t operate in a silo. Pull in human resources (HR), finance, risk, legal, and senior leadership to create a steering group that can monitor, unify, and make informed decisions together.
Turn to an expert. FCM Consulting work with businesses to make sense of a constantly changing environment. That means helping businesses understand the drivers behind travel cost changes, analyzing exposure to geopolitical changes, renegotiating supplier contracts, and using modelling to inform smarter decisions.
Michael’s final advice? Don’t aim for perfect certainty, aim for clarity and direction.
“We need to get comfortable with making good decisions in imperfect conditions. We never really know what’s going to happen next, uncertainty isn’t going away, and neither is business travel.”
This article is based on publicly available information as of June 2025. All figures listed herein were accurate when this blog was written. Be advised that the economic situation is quite fluid and may change at any time. For tailored advice, please speak to FCM Consulting, your travel management provider, or FCM account manager.