President Donald Trump is open to the idea of making foreign-flagged cruise ships register in the United States in order to get federal loans to support operations amid coronavirus-related shutdowns.
But the president is clearly also concerned about the effect of an industry collapse on local economies that serve as ports-of-call.
Asked about a call by Republican Sen. Josh Hawley of Missouri for cruise ship companies to become based in the United States, Trump said, “I like the concept.”
“Come back to America. And pay your taxes,” Hawley tweeted Thursday afternoon. “How about that?”
Hawley was responding to a CNBC report that said the cruise industry was “not confident” it could qualify for access to federal government loan programs in the phase three stimulus package that is expected to clear the House on Friday. Cruise ships are regularly flagged in foreign countries such as Panama and Liberia.
The move has allowed them to avoid paying many U.S. corporate taxes and has been part of a long-running battle with Capitol Hill over both tax payments and application of labor laws.
“I do like the concept of, perhaps, coming in and registering here. Coming into the United States,” Trump said at Thursday’s daily briefing on the coronavirus response. “It’s very tough to make a loan to a company when they’re based in a different country.”
The economic stimulus bill provides $500 billion for loans and loan guarantees to businesses affected by the epidemic, but in order to be eligible for those loans, a company must be “created or organized in the United States or under the laws of the United States” and “have significant operations in and a majority of its employees based in the United States.”
While many major cruise lines have operations in America, they often incorporate elsewhere for tax reasons under so-called “foreign flag laws.”
“They have thousands and thousands of people that work there, and almost maybe as importantly that work on shore filling these ships with goods and products,” the president said Thursday. “The cruise line business is very important.”
Speaking at the White House, Trump seemed particularly concerned with the industry’s effect on the economy of U.S. cities and towns where the ships often drop anchor. He talked about shops and businesses that are sustained by visits of the seafaring behemoths.
“It’s a big business. It’s a great business,” he said. “It’s a business that employs a tremendous number of people outside of the ship itself.”
Hawley is not at all alone in expressing that the cruise ships should formally move their businesses and registration to the United States to get the support of the Treasury Department.
Democratic Sen. Richard Blumenthal previously said, “I would oppose a bailout for the cruise industry.”
The Connecticut lawmaker has introduced a bill aimed at ensuring adequate medical personnel and legal authority on cruise ships. Rep. Doris Matsui, D-Calif., has introduced a House version of the bill.
While Trump repeatedly has suggested some sort of aid for the cruise industry in the past few weeks, the Senate bill did not single out the industry for help, as it did for airlines, transit and Amtrak.
Still, the Cruise Lines Industry Association, in a statement released Thursday, said it was grateful that the association’s travel agent members could receive relief under the bill as small and medium-sized businesses.
Before the outbreak, the association had projected that some 32 million people would go on cruises this year.
“For the more than 421,000 people in the United States whose jobs are supported by the cruise industry, we will continue to work with policymakers to help our community recover from the impact of this pandemic,” the association’s statement read.
The industry could have easily argued that the federal government hurt it. On May 17, the CDC recommended that travelers defer all cruises because of the pandemic. That recommendation came after vast outbreaks left two Princess cruise ships docked and quarantined in California and Japan. By mid-March, most major cruise carriers had halted U.S. departures.
Still, aid specifically to that industry would have likely been met with heavy resistance from Democrats, who argue it makes little sense to bail out an industry that does not pay most of the applicable U.S. taxes and is not subject to more strict U.S. employment and regulatory requirements.
“They aren’t American,” Rep. Peter A. DeFazio, D-Ore., chairman of the House Transportation and Infrastructure Committee, said earlier this month. “They don’t pay taxes in the United States of America.”