Trump Administration officials announced over the weekend they were “immediately” starting trade talks with the European Union on agriculture following last week’s meeting between President Trump and E.U. President Jean-Claude Juncker. During the meeting the two presidents agreed, in principle, to dial back the trade war.
Larry Kudlow, Trump’s economic adviser, said on CBS’s “Face the Nation” Sunday that the administration would “immediately” start negotiating to forge agreements with the European Union on farm and energy projects. “We will be starting immediately,” Kudlow said on the talk show. “We’ll be setting up a layered process to examine all the different areas.”
Conspicuously absent from the discussion was any talk about the 25 percent retaliatory tariffs that have impacted boat, whiskey and other U.S. exports into the E.U. Most U.S. boatbuilders that export to Europe said that the tariffs have either stalled or killed their export sales. Some anticipate a significant impact to earnings in the second half of the year.
“Last week’s meeting was basically a deal to make a deal,” Nicole Vasilaros, NMMA’s vice president of federal and legal affairs, told Trade Only Today. “There are no timelines or specifics on how they might eliminate these retaliatory tariffs. Everything is still in effect, including the U.S. tariffs on steel and aluminum from the E.U.”
Vasilaros said that given the E.U.’s “multimember process of approvals,” any reversal of the E.U. tariffs could take time. All 28 member countries must approve any changes in trade policy. “We don’t see it as a quick fix, but at least we’re no longer escalating things,” she said. “But we don’t know when to expect relief.”
The NMMA is equally worried about boat exports to Canada, which is a significantly larger market for U.S. builders. “There has been no talk about bringing Canada to the table over these tariffs,” Vasilaros said.
Brunswick Corp. said last week following its Thursday earnings release that its Boat Group exports to the European Union, and Canada would be impacted by those countries’ retaliatory tariffs. Canada implemented a 10 percent duty on imported U.S.-built boats on July 1. The company also expects its second-half results to be negatively impacted by a U.S. tariff on 1,300 imported products from China, which includes 40- to 60-hp Mercury outboards built in that country.
“Overall, we anticipate a $10 million to $15 million negative impact on second half earnings resulting from these tariffs, with the engine tariff accounting for approximately two-thirds of the impact,” said Brunswick chairman Mark Schwabero during a conference call following its second-quarter earnings release.
Schwabero said Mercury would request an exemption for the outboards built in China. “But absent a successful exemption, we'll pay the tariffs on these imports,” he said.
Vasilaros will testify before the U.S. Trade Representative next month regarding the list of tariffs targeting Chinese imports. She said that facility visits by government officials are “critically important” for highlighting issues the boating industry is facing. Sen. Bill Nelson (D-Fla.) raised the effects of the tariffs during a Senate hearing last week following a visit to Correct Craft in Orlando, Fla. Rep. Seth Moulton (D-Mass.) also introduced legislation that would help U.S. boat and equipment manufacturers targeted by retaliatory tariffs.
“The trade war has hit our industry particularly hard and on multiple fronts,” Vasilaros said. “This bill would help counter one our largest concerns — punitive tariffs on exports that have halted sales to our largest trading partners.”