CANADA-US TARRIF WAR “AN UNMITIGATED DISASTER” FOR RECREATIONAL BOATING INDUSTRY
June 5, 2018
Talk about starting the month on an explosive note. On Thursday, May 31, the Trump administration announced that it would proceed with applying new import tariffs of 25 percent and 10 percent respectively on all steel and aluminum imported into the US from Canada, Mexico, and the European Union (EU). In retaliation, all three trading partners announced their own tariffs on US-made goods. In Canada’s case, effective July 1 new Canadian import duties go into effect on a variety of US-made goods – including a new 10 percent tariff on boats.
Inflatable boats, sailboats, and both outboard-powered and inboard-powered motor boats are specifically identified on a Canadian government list of US-made goods which will be subject to the new tariffs. “Aluminum boat manufacturers are directly impacted, obviously, but so are fibreglass boats,” said Campion Marine president Brock Elliott. “Our molds are framed in steel. Our windshields have aluminum extrusions. Our ski pylons and fasteners are stainless steel. The trailers are made of steel. In the end it’s the consumer who pays. We want to grow boating, we don’t need additional costs.”
Added costs to ship aluminum or steel goods over the border represent a significant challenge to the recreational boating industry, given the tremendous level of cross-border integration that exists in both the supply chain and wholesale distribution aspects of the business.
“These tariffs have obviously been looming for a while and we’ve been watching them because they impact us for both steel and aluminum, which we use in boats and boat trailers,” said Legend Boats president and co-CEO, Marc Duhamel. “Many of the products that the Canadian government has decided to apply new tariffs to are things like maple syrup, goods that we have a large enough domestic supply of that they really don’t have to be imported. But our supply of boat manufacturing has no surplus. The builders that are located here in Canada can’t possibly keep up with the volume of product that’s currently coming in from the US. So applying tariffs on boats is only going devastate the industry, both here in Canada and south of the border. This year we were already expecting price increases, now these extra tariffs will simply drive prices up to the point I’m worried that consumers will just shut off and walk away.”
National Marine Manufacturers Association (NMMA) president Thom Dammrich called the new tariffs “an unmitigated disaster.” In a statement to the industry and lawmakers, Dammrich wrote “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. As a result, rather than protecting American manufacturing, these tariffs directly harm the entire recreational boating industry – one of our country’s enduring industries. 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.”
Canadian prime minister Justin Trudeau is expected to meet with Trump and other trading partners this week at the 44th G7 Summit, being held in La Malbaie, Quebec. The prime minister called president Trump’s assertion that the US tariffs represent a national security interest as absurd and insulting. “We will continue to make arguments based on logic and common sense, and hope that eventually they will prevail against an administration that doesn’t always align itself around those principles,” he said.
“There is still time for political leadership on both sides of the border to come to their senses,” said Duhamel. “I’m hoping this issue can be resolved and be chalked up to a bad memory. We definitely need all of our advocacy efforts through NMMA and our industry efforts to be directed to our government saying do not destroy us as an industry. Because as things stand right now, nobody wins.”
