The Royal Caribbean cruise ship ‘Explorer of the Sea’.

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Shares of cruise strains tumbled Thursday immediately after Commerce Secretary Howard Lutnick proposed the Trump administration would crack down on taxes paid by the companies.

“You at any time see a cruise ship using an American flag around the back again?” Lutnick said in an look late Wednesday on Fox Information.

“None of these spend taxes … each individual supertanker. None pay out taxes … all overseas Alcoholic beverages. No taxes. This will conclusion under Donald Trump,” explained Lutnick.

Shares of Carnival dropped five.nine%, Royal Caribbean lost 7.6%, Norwegian Cruise Line fell 4.9% and Viking Holdings weakened by 3%.

Analysts at Stifel Money known as the promoting in cruise stocks a “substantial overreaction,” and proposed investors use the slump to purchase the names “on weakness.”

“[T]his is probably thetenthtime in the last 15 many years We have now found a politician (or other D.C. bureaucrat) speak about transforming the tax composition from the cruise sector,” wrote analysts led by Steven Wieczynski. “Every time it had been introduced, it didn’t get pretty far.”

“[F]om a tax standpoint the cruise business is embedded under the cargo market from the eyes of The interior Profits Company,” Stifel wrote. “That would mean the whole cargo market would have to be turned upside down even before they got to the cruise field, which is a sliver of the scale on the cargo market.”

The cruise industry could possibly reply by shifting their company headquarters outdoors the U.S., decreasing the volume of Work opportunities stored in the U.S., the report claimed. “With 90%+ in their company remaining carried out in international waters, it will then be not possible for that U.S. (or every other entity) to focus on the cruise operators.”

Stifel has buy suggestions on 6 cruise industry stocks: Carnival, Royal Caribbean, Norwegian, Viking and Lindblad Expeditions Holdings and OneSpaWorld Holdings.

“Cruise lines shell out substantial taxes and fees from the U.S.— to the tune of virtually $two.five billion, which signifies sixty five% of the entire taxes cruise traces fork out throughout the world, While only a really modest proportion of functions manifest in U.S. waters,” said the Cruise Lines International Association, in a statement. “Foreign flagged ships that pay a visit to the U.S. are dealt with a similar for taxation purposes as U.S. flagged ships checking out foreign ports, which gives regular reciprocal treatment method across Worldwide transport.”

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