Top two export markets for US-Built Boats to Impose Retaliatory Tariffs - Trade Only Today

Top two export markets for US-Built Boats to Impose Retaliatory Tariffs

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Aluminum boat sales have far outpaced fiberglass boat sales post-recession. Source: Statistical Surveys Inc.

Aluminum boat sales have far outpaced fiberglass boat sales post-recession. Source: Statistical Surveys Inc.

The world reacted this morning after the Trump administration-imposed aluminum and steel tariffs on the country’s closest allies, with Mexico, Canada and the EU all announcing retaliatory tariffs, and China announcing it would slash duties on 1,500 consumer products by 60 percent.

Canada, the No. 1 exporter of U.S.-built boats, said it intends to respond with retaliatory tariffs on items including boats; the EU has already said it would impose duties on all U.S.-built vessels, from kayaks to fiberglass center consoles.

The National Marine Manufacturers Association joined many Republicans in lambasting the move, saying the Trump administration has “time and time again threatened the recreational boating industry’s growth” with the three tariffs it has imposed or plans to impose on aluminum.

“Simply put, these tariffs are a disaster for our industry. All types of recreational boats are on the retaliatory lists from both Canada and the EU,” said NMMA president Thom Dammrich in a statement that called on Congress to “help put a stop to what will inevitably be a severe hit to our nation’s economy.”

“As a result, rather than protecting American manufacturing, these tariffs directly harm the entire recreational boating industry — one of our country’s enduring American-made industries,” Dammrich said. “To make matters worse, Canada, Mexico, and the EU are the top three export markets for American-made marine products and in 2017 they accounted for nearly 70 percent of marine exports."

A 25 percent tariff on steel and a 10 percent tax on aluminum from Canada, Mexico and the EU went into effect today after NAFTA talks stalled.

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.

“The decision to impose tariffs on major trading partners severely harms the $39 billion U.S. recreational boating industry and the 650,000 American workers it supports,” Dammrich said. “Of the marine manufactures that build aluminum boats, the majority use domestic aluminum.”

The issue with these tariffs is not so much about having to pay higher prices for imported aluminum as it is about the drastic price increases boat builders are already experiencing from domestic aluminum mills, and the “severe blow” to the competitive global market manufacturers depend on, Dammrich said.

RV stocks dropped yesterday following the announcement, with Thor Industries down 5 percent, though stocks in marine seemed stable.

Volvo Group CEO Martin Lundstedt told President Trump at the World Economic Forum in Davos, Switzerland, that tariffs on aluminum and steel would punish the U.S. manufacturing operations for the company.

All of the companies’ Mack trucks and Volvo trucks are manufactured in the United States, primarily in Pennsylvania and some in Virginia, Lundstedt said at the Volvo Ocean Race Newport stopover in May.

The company is running its largest investment program in company history in the United States, just north of $2 billion, focused on R&D, he said. Steel tariffs would “actually be punishing the American manufacturers more” than those building outside of the United States, Lundstedt said, and could alter the way the company invests.

Senate Finance Committee Chairman Orrin Hatch, R-Utah, on Thursday blasted the Trump administration's decision to place steel and aluminum tariffs on the European Union, Canada and Mexico, saying the financial penalties are a "tax hike on Americans."

"My position remains unchanged: Tariffs on steel and aluminum imports are a tax hike on Americans and will have damaging consequences for consumers, manufacturers and workers," Hatch said in a Twitter statement.

“This is dumb. Europe, Canada, and Mexico are not China, and you don’t treat allies the same way you treat opponents,” Sen. Ben Sasse, R-Neb., said in a statement. “We’ve been down this road before — blanket protectionism is a big part of why America had a Great Depression. ‘Make America Great Again’ shouldn’t mean ‘Make America 1929 Again.”

“Prior to this formal 232 announcement, NMMA members were already feeling the effects of uncertain trade policy,” said Dammrich. “From an anti-dumping and countervailing duty investigation of common alloy aluminum sheet imports from China, to proposed Section 301 tariffs, the Administration has time and again threatened the recreational boating industry’s growth.

“Today’s decision fails to acknowledge the thriving American manufacturing sector, particularly of marine products,” Dammrich said. “In 2017, total recreational marine expenditures reached a ten year high of $39 billion. This growth was expected to continue into 2018 and beyond, but the administration’s actions today jeopardize the stability of the industry and ultimately harm every American consumer, worker, and business.”

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