By Bruce Claflin, Scuttlebutt Magazine
Our boating season is short, our summers mostly glorious. This time of year it can be difficult to take our attention away from our outings, our families, and the preparation it takes to make our days on the water the best they can be. This summer there has been much background noise and unless you have been living off the grid, you have been hearing about tariffs and trade wars. Seldom do we write about political issues, but the tariffs and trade wars you are hearing about could very well have a dramatic effect on the Marine industry and the boating community as well. In an attempt to increase awareness, and with the help of some friends, we’d like to help you understand the issue and some of its potential consequences.
Earlier this year, the United States imposed import tariffs on aluminum and steel products, as well as a vast array of Chinese products and goods. In retaliation, China, Canada, the European Union, and several other countries have brought tariffs of their own to bear. The issues are complex. Much of it has to do with “fair trade” and much of it has to do with China’s rule of requiring foreign companies to share their technology as a condition of doing business there. We are at once trying to keep American businesses competitive from a price standpoint, and protect the intellectual property of U.S. companies. Once our government identified practices that inj ured U.S. business we imposed a tariff, other countries retaliated, we responded, and so on. While much of it seems to be political huffing and puffing, the effect on U.S. businesses is real. We all know that when conducting business becomes more expensive for the manufacturer, it’s usually the consumer that pays. Higher manufacturing costs mean less production here, which typically results in higher prices for consumers.
Since uncertainty currently reigns, the price of aluminum sheet has already increased. Aluminum is critical to the manufacture of many boats including its use in pontoon boats, fishing boats, boat lifts, boat trailers, and many other components. Most U.S. manufacturers source their aluminum domestically, but the situation has already disrupted global markets resulting in significantly higher prices. In addition, Canada and the European Union have issued lists of retaliatory targets that include recreational boating. Canada and the EU are the two largest export markets for the U.S. marine industry.
According to the National Marine Manufacturer’s Association (NMMA), 95% of the boats sold in the U.S. are manufactured here, making this a troubling situation for the industry and the consumers who rely on them. Closer to home, Minnesota has one of the largest concentration of marine businesses in the country. Recent NMMA statistics reveal that boating in Minnesota has a 5.5 billion dollar economic impact. That makes Minnesota one of the most vibrant markets nationally with some 700 marine related businesses supporting approximately 28,000 local jobs.
The story is still unfolding and we will try to follow up once the dust settles. We thank our friends at the NMMA–for looking out for all of us, and for providing much of the background information for this article. They have also provided the accompanying chart which illustrates which tariffs are in place, which are still under review, and which products will be affected. For now, boat buyer beware as higher prices may be looming in the future.