While companies like Best Buy, which relies heavily on imports from China, have said President Donald Trump’s tariffs could force price increases, Disney CEO Bob Iger is using a different tactic.
In a private conversation with ABC News, reported by Status, Iger said that the company may need to scale back spending if costs for overseas goods or raw materials rise too much. This could affect the construction of Disney’s newest cruise ships, as it relies on steel, often imported from China.
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It’s not just the construction of cruise ships or theme park attractions that could be vulnerable. The Wall Street Journal reported that Disney is the world’s biggest licensor of consumer products, including the popular Star Wars and Marvel Cinematic Universe franchises. Toys, clothing and action figures represent 5% of the company’s revenue but account for 13% of its operating income due to the profit margins on these items.
Extensive tariffs could reduce margins, forcing Disney to either raise prices or, as Iger indicated, cut spending in other areas to make up for the loss.
Also see how high tariffs are affecting travel costs and where you can save.
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How Could Cuts Affect the In-Park Experience?
Disney park attendance in the U.S. dropped in 2024, with operating income for Walt Disney World Resort in Orlando, Florida, and Disneyland in Anaheim, California, down by 5% in the fourth quarter. The Orlando location struggled with hurricane-related shutdowns that cost the company $120 million, according to TheStreet.
In October 2024, Disney increased park ticket prices and also raised prices on food and services. “Disney added more extras to make more revenue per guest, like taking free fast passes and making them an extra cost,” said Steven Griswold of Pixie Vacations. The parks also reduced services, such as the number of Extra Magic Hours available for resort guests to enjoy rides amid smaller crowds.
Even die-hard Disney fans may not take kindly to any more price hikes. “Consumers only have so many vacation days, and I think with the existing price increases it would be difficult to add even more additional costs to Disney guests and expect them to still book,” Griswold said.
It’s possible Iger has evaluated these factors and realized the only way to weather the tariff storm is to reduce spending while maintaining or increasing value.
In late March, the park announced half-price children’s tickets on three-day or longer park visits from May 27 through Sept. 20, 2025. Disney also brought back its popular free dining meal plan for select visitors next year and 30% off select Disney Resort hotel rooms for certain dates.
These deals could drive traffic to the park, offsetting losses in other categories for the entertainment company. “There is no other place to go but to look at cost-cutting measures until something changes,” Griswold said.
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How Could Cuts Affect Disney Stock?
Disney stock is down from its 52-week high of $118.63, plummeting to $81 in early April amid the tariff announcements. This could be a good time for investors to hang tight and dollar-cost average. Insider Monkey rated Disney as one of the 10 best stocks to buy and hold for 20 years.
Trefis, an interactive financial community, likewise deemed Disney stock a “Buy.” The website noted Disney’s weak financials and short-term volatility as a risk while explaining that its “streaming momentum and content pipeline” could offer upside over the long term.
Griswold agreed that Disney is struggling with low theme park attendance, Disney+ losses and a downturn in movie productions, but he believes in the company’s long-term viability. “It’s just a matter of time until things turn around again, but it’s hard to tell when that might happen,” he said.
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Sources
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Status, “Iger’s Tariffying Assessment.”
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The Wall Street Journal, “Even Disney Is Exposed to Tariffs.”
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TheStreet, “Disney suffers unexpected loss at its theme parks.”
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Steven Griswold, Pixie Vacations
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Insider Monkey, “10 Best Stocks to Buy and Hold for 20 Years.”
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Trefis, “Why Is Disney Stock Trading So Cheap?“
This article originally appeared on GOBankingRates.com: Disney May Have To Cut Back Spending Amid Tariffs: How Could This Affect Travelers and Investors?
