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NMMA: Recent trade agreements positive but not enough

Tariffs

The National Marine Manufacturers Association today said there have been developments on the trade and tariff fronts during the past few weeks, but existing tariffs continue to hurt the U.S. boating industry.

The trade association said in today’s Currents e-newsletter that it was “encouraged” by the recent ratification of the United States-Mexico-Canada Trade Agreement and the initial Phase One Trade Agreement with China. It added, however, that “more work” is necessary to remove other tariffs to “ensure the marine industry can continue to grow.”

The U.S. Senate recently ratified USMCA, sending the agreement to President Trump for his signature. Mexico has approved USMCA. Canada is expected to ratify the agreement shortly. All three countries must pass it before it goes into effect. Canada and Mexico account for 40 percent of the industry’s annual boat and engine exports.

“NMMA applauds industry advocates for contacting their members of Congress through Boating United, urging Congress to quickly ratify USMCA and get this agreement across the finish line,” NMMA said in Currents.

Nicole Vasilaros, NMMA senior vice president of government relations and legal affairs, said the “Phase One” agreement that President Trump signed with Chinese officials will keep the current trade war from escalating. The deal cancelled tariffs on marine products on List 4B and reduced tariffs on products on List 4A.

“But it doesn’t reduce or eliminate existing tariffs on Lists 1, 2 and 3, where the vast majority of marine products are,” Vasilaros told Trade Only Today. “We’ve been able to gain over a dozen exclusions from the tariffs, but hundreds of others are still on the lists. We’ve worked with our members on over 100 exclusion requests.”

Vasilaros said companies whose product lines were excluded have been able to invest in infrastructure. “Sea Eagle, who didn’t have to pay hundreds of thousands of dollars on tariffs, avoided layoffs and invested in new-product development. Roswell Marine is a similar story and plans to invest more heavily in its U.S. operations.”

The exclusions are only valid for a year, however, and there is no guarantee they will be renewed. Mercury Marine gained an exclusion for the low-horsepower outboards exported from its facility in China last year but was unsuccessful in its application for 2020.

The 25 percent duty on U.S.-built boats exported to the European Union remains another impediment to trade. Vasilaros does not see a quick solution for the E.U. retaliatory tariff since it is tied to the tariffs that the Trump administration earlier placed on imported steel and aluminum.

Vasilaros said the recent visit by Phil Hogan, the European Union’s commissioner for Trade, to Washington, D.C., signaled some hope that there might be movement in the tariff discussions. “Reports were that the conversations were good, but there has not been anything concrete to come out of it yet,” she said.

The E.U. tariffs are a “huge problem” for many U.S. builders, with the latest data showing a 30 percent year-over-year decline in boat exports to Europe. Conversely, boat imports from European builders to the United States have increased.

“It’s an inequity, and we’re all wondering how much longer this will last,” Vasilaros said. “There are U.S.-built boats, like wake-sport boats, that have a solid following in Europe. But people aren’t willing to pay 25 percent more for them.”

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