RECREATIONAL BOAT 10% TARIFF – INDUSTRY UPDATE
July 10, 2018
Photo: Tracey Hart of Discover Boating, Sara Anghel NMMA Canada president and Tom McNair NMMA Chairman and VP Fresh Water Boat Sales – Brunswick Boat Group, travel to Ottawa annually in the NMMA “Day on the Hill” to lobby the government on behalf of the marine industry. Government insiders were heard to comment that recreational boating was the most vocal group opposing the tariffs.
The marine industry has really come together over the sudden imposition of a 10% retaliatory tariff on recreational boats and equipment coming into Canada from the U.S.A.
I was included in an important NMMA conference call on July 5 organized by NMMA Canada President Sara Anghel. On the call were the NMMA Canada board members and the the heads of Canada’s marine trade associations.
Sara Anghel lead off the discussion with the goal of developing a formalized submission to Finance Minister Bill Morneau’s Office seeking industry compensation for damages resulting from the imposition of the new tariffs.
Among the many important points raised in the discussions was the fact that the government should not have levied tariffs on an industry where there was effectively no Canadian supply as this penalizes the entire industry.
Only Campion Boats is a Canadian fiberglass boat builder of significant size and in aluminum, we have Princecraft Boats owned by Brunswick and already shipping much of their production to the U.S.
Another point was that considering the wide-ranging list of goods now subject to the 10% tariffs, the impact on a bottle of ketsup will be roughly $0.35 cents at retail while the same 10% on a boat will be thousands of dollars in many cases so, the impact is very badly out of proportion.
The heads of the marine trade associations stated that they knew of many of their members who are cancelling boat orders, but it was also noted that dealers were already short of product and were loosing sales.
Failure to order new boats this fall risks leaving dealers without boats to show at the winter boat shows and for inventory to sell in the spring of 2019. The very strong demand in the American market at present adds to the challenge.
The most dire aspect of the new tariffs and how they are expected to be applied is that most dealers have little or no free cash or retained earnings to pay the 10% tariffs as their boats cross the border. Tariffs and other taxes cannot be covered in the dealer’s floorplan or other credit facilities. Tax payments are not an asset that can be used as collateral for loans. This seriously curtails the ability of smaller dealers to order boats for inventory.
For the boat show season, there was discussion about bringing boats into Canada in Bond and earlier that day in a separate phone call, Boating Industry Canada had interviewed Linda Waddell of Canadian Boat Shows on this. She is familiar with this process and has often had boats in Bond on the show floor in the past.
A key question dealers should investigate for their specific businesses, is to contact their OEM’s and Customs Brokers for guidance on shipping boats in Bond.
Other important questions delved into detail about whether or not engines could be ordered separately to minimize the tariff impact. Some engines are shipped from countries other than the U.S. directly to Canada. The group needs clear rules from the Government as to exactly what products get hit, under what circumstances and when. There is very little information available from the Government so far.
In a time of such great uncertainty, every marine industry business should be members in their marine associations and should be in regular contact with their OEMs and suppliers.NMMA Canada is leading the charge for the industry.
For the bigger picture, we encourage the industry to follow Boating Industry Canada by reading News Week to check for new developments in this difficult situation.
Andy Adams
