Brunswick granted tariff exclusions for engines built in China

Brunswick Corp. has been granted exclusions from Section 301 tariffs for its 40 horsepower, 50 horsepower and 60 horsepower Mercury Marine engines.

The engines are assembled by Mercury in China and sold globally.

The exclusions reduce Brunswick’s estimated net pretax tariff impact in 2019 to approximately $17 million to $22 million, down from the estimate of $30 million to $35 million provided in the company’s recent third quarter earnings call.

With the retroactive nature of the exclusions (dating back to an effective date of July 6, 2018), the company anticipates a favorable change in 2018 pretax earnings, versus previous estimates, of approximately $4 million to $6 million.

This estimated impact for 2018 is based upon the eventual refund of the tariffs paid to date on these engines since July, net of customer tariff surcharges that will be refunded to customers by Mercury Marine as soon as practical.

Mercury’s engines were among the 1,300 products originally targeted for the 25 percent tariff.

The exclusion requests were reviewed and approved by both the United States Trade Representative and the U.S. Customs and Border Protection.

“We are pleased that the USTR and CBP have approved the exclusion requests for these three classes of outboard engines, which are very popular choices for fishing and family boating activities,” said Brunswick Chairman and Chief Executive Officer Mark Schwabero. “It is good for consumers as well as for American manufacturers. We remain hopeful that the trade issues which led to the imposition of tariffs and subsequent retaliatory tariffs can be resolved quickly and amicably between the U.S. and its trading partners.”