Each year the boating industry gravitates to its biggest (and sunniest) boat show in Miami to meet and discuss important issues and last week was no exception. During numerous board meetings, roundtables and other industry gatherings we worked together to tackle some of our top concerns. And, global trade and tariffs were at the top of the list in every meeting.
Everyone agreed that the ongoing trade war is having a negative effect on the uniquely American recreational boating industry. Along with raw materials and components becoming more expensive and difficult to procure, sales to our largest international buyers are down. Put simply, the American boat manufacturing industry is seeing costs increase while sales to international customers decline. That means fewer boats, engines, fish finders, and thousands of additional marine accessories are not being sold which will eventually impact American jobs.
While most agree there are trade inequities that need to be fixed; pretty much everyone also agrees we are currently in an unendurable position. Last Fall, I joined Nicole Vasilaros of NMMA in a meeting at the White House where I was able to share some of the ways our industry is being impacted by the current trade/tariff situation and was told by the White House staff that they know U.S. businesses are currently being negatively impacted by tariffs, but they are trying to negotiate a good long-term deal.
As the previous Co-Chair of a Trade Committee that advised the U.S. Secretary of Commerce, I understand there are trade issues that clearly need attention. So, I respect the Administration’s effort to correct trade inequities, but I also want to highlight the unintended consequences of that effort.
The U.S. boating industry is being impacted in three areas of the world:
- European Union (EU) – EU retaliatory tariffs on U.S. boats of 25% are significantly hurting our industry’s boat sales in Europe. Unfortunately, with the EU focusing on BREXIT and the U.S. focusing on both a North American deal and China, not much seems to be happening with an EU/U.S. deal.
- China – The U.S. and China seem to be negotiating feverishly. Last week President Trump announced he was willing to move back a March deadline for more tariffs if the progress continues.
- Mexico and Canada – The U.S., Mexico and Canada have a new agreement, the US-Mexico-Canada Agreement (USMCA) which was signed by President Trump but still needs to be ratified by the U.S. Congress. Unfortunately, the USMCA does not deal with the thorniest issue for the boating industry; the Section 232 national defense tariffs applying to steel and aluminum, which was signed by President Trump and resulted in retaliatory tariffs on U.S. products that included a 10% tariff on boats.
With ratification of USMCA on the horizon, there’s an opportunity to address some of our trade imbalances with the added bonuses of restoring normal market prices for aluminum and steel and removing retaliatory tariffs on quintessential American industries, like boat building. Though these items are not included in USMCA, many in Congress have indicated that they will review the trilateral agreement in light of these additional tariffs that are hurting US businesses. This will create a tremendous amount of visibility of the 232 tariffs that are hurting our industry and give us a chance to demonstrate the unintended consequences of the trade war on our industry and employees.
These actions are not just important for boat builders: they’re critical for the entire marine manufacturing industry. While the strong domestic market is currently mitigating losses from dwindling international sales, there’s no indication this will last forever, and regardless of the U.S. demand, U.S. manufactures want to support and protect their investment in global distribution which creates American jobs. And every day this continues, the more likely we are to cede global market share to non-American manufacturers which will eventually cost American jobs.
Our elected officials rely on us for real-time feedback on how polices are impacting businesses in their communities. As citizens and members of the recreational boating industry, we owe it to our workers and their families to speak up before their livelihoods are jeopardized.
I encourage everyone to convey the same message to their elected officials: The time is now to ratify USMCA while simultaneously removing Section 232 tariffs. This will lower costs for American businesses, lower prices for American consumers, increase the availability of materials and eliminate retaliatory tariffs. U.S. workers, consumers, and their families will all be the beneficiaries of this commonsense economic decision.
Bill Yeargin is the president and CEO of Correct Craft.