Retaliatory tariffs by Canada and the European Union are prompting marine dealers abroad to cancel orders of U.S.-built boats — the result of a “self-inflicted wound” the government has imposed on U.S. manufacturers, according to the National Marine Manufacturers Association.
The 10 percent tariffs by Canada on American-made boats and those announced by the EU, which are expected to be set at 25 percent, were a hot topic at the International Council of Marine Industry Associations and International Federation of Boat Show Organizers Congress in Germany this month, National Marine Manufacturers Association president Thom Dammrich told Trade Only Today.
The tariffs on boats will go into effect July 1.
“It is not surprising that orders from Canada and Europe are being cancelled,” Dammrich said. “I think, frankly, both of those export markets are just going to be frozen right now until people see what happens. Because you won’t be able to sell boats at those inflated prices.”
The tariffs were announced after President Trump imposed steel and aluminum tariffs on the country’s closest allies; Canada, Mexico, and the EU account for 70 percent of boat exports, said Dammrich.
“We export about a billion dollars’ worth of boats” each year, accounting for about 15 percent of dollar sales for marine manufacturers, Dammrich said. “If sales drop 15 percent, I don’t know, it sounds like a recession to me.”
The escalating trade war caused “a lot of head shaking” at the ICOMIA Congress held in Berlin June 5-8, said Dammrich, and will result in manufacturing job losses, Back Cove Yachts and Sabre Yachts sales and marketing vice president Bentley Collins told Trade Only.
“These tariffs were carefully chosen to inflict the most pain in states where Trump has a lot of support,” said Dammrich.
It will also hurt European and Canadian boat retailers, he said.
“It’s just so totally unnecessary.” Dammrich said. “It’s a self-inflicted wound — wound inflicted on us by our own government.”
Three different types of tariffs are being levied on aluminum. Section 232 of the Trade Expansion Act of 1962 allows the president to restrict imports for national security, including economic security. The tariffs include 10 percent on imported aluminum and 25 percent on steel.
The U.S. Commerce Department announced the countervailing tariff amounts on aluminum sheet from China in April, with varying amounts imposed on different Chinese suppliers. A separate anti-dumping investigation to determine if China is dumping aluminum sheet is expected to spark additional tariffs.
Though 90 percent of boat manufacturers source aluminum domestically, prices have fluctuated wildly in the last several months, at times jumping 30 percent, while supply of sheet aluminum used for making boats has become limited.
Aluminum is used to build more than half of all boats sold in the United States (excluding personal watercraft), and 90 percent of boats sold to Americans are built in the country.
Aluminum boat sales, which can typically be purchased at a lower price point than fiberglass boats, have led overall industry growth post-recession, according to data from Statistical Surveys Inc.
Excluding PWCs, aluminum boat sales grew 6.28 percent in 2015, well ahead of the 4.59 percent growth of fiberglass boats. In 2016 the trajectory continued, with 6.4 percent growth in aluminum boat sales versus 5.23 percent growth in sales of fiberglass boats.
Last year, 118,433 aluminum boats were registered in the United States, versus 91,504 fiberglass boats.
“I feel for American boatbuilders and their suppliers,” said Dammrich. “Because if you build fewer boats, you buy less supplies to put on those boats. I feel bad for U.S. manufacturers and suppliers, who don’t deserve this
The NMMA is holding a webinar today at 2 p.m. on the issue.