Tariffs and Recreational Boats

Interesting article:

Tariffs Are Wrecking on Recreational Boat-Building Industry – gCaptain

Yeah, interesting.

Here is another I thought was interesting.

https://www.dieselworldmag.com/diesel-news/cummins-crisis-us-tariffs-to-affect-china-made-parts/

I am as disgusted as anyone at our president's war with China over tarriffs. But the attached article is way over blown. An aluminum pontoon boat that normally sells for $30,000 will go up by $7,000. GMAFB!!


That boat probably has at most 2,000 lbs of aluminum in it. Raw aluminum costs less than $1.00 per pound with no tarriffs. See- Aluminum Prices and Aluminum Price Charts - InvestmentMine. A 25% tarriff will add maybe $500 to the cost of the raw materials that go into a boat.


David

dhays said:

Yeah, interesting.

Here is another I thought was interesting.

https://www.dieselworldmag.com/diesel-news/cummins-crisis-us-tariffs-to-affect-china-made-parts/

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Is the idea to force manufacture back to onshore in USA?

If you take into account labor costs etc in USA, would that result in a similar effect on pricing?
Inflation used be seen as a bad thing, now some Govts actually seek inflation.
It`s an odd economic world Trump is creating, but I remember his words" Trade wars are good, they are easy to win". I hope it works out well,worldwide. I`m sure it`s really not, but from here USA seems to have morphed into a dictatorship. If so, let`s hope it`s a benevolent one.

Based on this article in today's Trade Only Today, I dunno how much impact tariffs are actually having on US builders of aluminum boats.

https://www.tradeonlytoday.com/indu...tm_content=textliFnk&utm_campaign=enewsletter

--Peggie

BruceK said:

Is the idea to force manufacture back to onshore in USA?

If you take into account labor costs etc in USA, would that result in a similar effect on pricing?
Inflation used be seen as a bad thing, now some Govts actually seek inflation.
It`s an odd economic world Trump is creating, but I remember his words" Trade wars are good, they are easy to win". I hope it works out well,worldwide. I`m sure it`s really not, but from here USA seems to have morphed into a dictatorship. If so, let`s hope it`s a benevolent one.

Click to expand...

Inflation is happening, trade wars or not. The tariffs on incoming AL only makes it happen faster. Now consider the tariffs on incoming China materials and components. Prices go up more. Start building in the US. Again, prices go up even more. The net result is lots of people losing jobs and companies going pout of business because people won't/can't buy their products anymore.


I think it was a huge mistake for industry to move manufacturing off shore over the past 20-30 years, but the horse is out of the barn. We all live on a price structure that reflects that manufacturing reality. Change it, and prices will rise dramatically and/or wages will drop dramatically. Both will grind the economy to a halt.

HeadMistress said:

Based on this article in today's Trade Only Today, I dunno how much impact tariffs are actually having on US builders of aluminum boats.

https://www.tradeonlytoday.com/indu...tm_content=textliFnk&utm_campaign=enewsletter

--Peggie

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The tariffs are hitting the business on both ends. For US builders, costs are up due on tariffs on incoming goods. That drives prices up, but is arguably non-fatal.


But apparently worse are the tariffs on finished product that we export - something that helps counter our horrific trade deficit. That drives the purchase price in other countries for our good through the ceiling, and as boat exporters are seeing, sales come to an immediate and complete stop. Then all the US infrastructure (jobs plus indirect economic activity) implodes, causing exactly the opposite of the desired result. Simply brilliant.

twistedtree said:

The tariffs are hitting the business on both ends. For US builders, costs are up due on tariffs on incoming goods. That drives prices up, but is arguably non-fatal.


But apparently worse are the tariffs on finished product that we export - something that helps counter our horrific trade deficit. That drives the purchase price in other countries for our good through the ceiling, and as boat exporters are seeing, sales come to an immediate and complete stop. Then all the US infrastructure (jobs plus indirect economic activity) implodes, causing exactly the opposite of the desired result. Simply brilliant.

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Yup! US made boats imported into Canada have just been slapped with a tit-for-tat 10% tariff, all because a “certain somebody” felt that Canadian steel and aluminum were a security threat to...well...I’m not sure who?

Jim

Well maybe these builders can start buying American aluminum, thus a need to open steel and aluminum plants here in the US.

Alaskan Sea-Duction said:

Well maybe these builders can start buying American aluminum, thus a need to open steel and aluminum plants here in the US.

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At elevated cost, or they would be doing it already.

My thoughts would be deemed political, so I will bite my tongue.

MYTraveler said:

My thoughts would be deemed political, so I will bite my tongue.

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Regardless of the politics, I am interested in how the tariffs will affect us a boating consumers as well as the industry itself. A few here are contemplating buying Helmsman Yachts for example. The final cost will be influenced by tariffs going both directions. The same is true of North Pacific Yachts. Bob's "Mahalo" may have had a significant price difference with the tariffs as well.


At the same time, what about the domestic trawler builders? Nordic Tug and American Tug could be helped or hurt by the tariffs. Too many variables for me to figure it out, but again I'm curious. I want all of the above builders to succeed. It helps the industry and ultimately it helps us as boaters.


So regardless of whether trade wars are a brilliant and cunning economic strategy created by a business genius that will resurrect the dying steel and aluminum mills in the US, restore equity in our trade relationships, boost domestic employment and wages, and raise the status of the US around the world, or...


...the tariffs are nothing more than the deranged rantings of an orange man-child designed to pander to a base ignorant of basic economic theory...


...it really doesn't matter to the discussion of how the tariffs may affect the recreational boating industry. So if you have some ideas as to the effects of the tariffs on us as boaters, I'd be interested to hear your thoughts.

As Grover Norquist says, "Tariffs are a tax on the many for the benefit of the few". Socialism.
The whole purpose of tariffs is to make things more expensive, forever.

caltexflanc said:

As Grover Norquist says, "Tariffs are a tax on the many for the benefit of the few". Socialism.
The whole purpose of tariffs is to make things more expensive, forever.

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Is not the US Republican Party the champion of free trade? Perhaps Trump disagrees with Norquist(assuming he knows of him).

Whether it be tariffs, or domestic manufacture, things will cost more. But there should be more jobs in domestic manufacture, leading to more US economic activity.
China, and other lower cost manufacturers have become the factory to the world.Turn that on its head,there will be many repercussions as the world tries to accommodate the changes.

What could possibly go wrong? To quote another Trumpism,"We will see what happens". Which could be code for "I`ve no idea,anything could happen".

If we place tariffs on imported boats, which AFAIK hasn't happened yet, you can bet that prices will go up on all boats at least as much as the tariff, even though the US made boats will not be subject to the tariff. Simple supply and demand economics.


David

BruceK said:

Is not the US Republican Party the champion of free trade? Perhaps Trump disagrees with Norquist(assuming he knows of him).

Whether it be tariffs, or domestic manufacture, things will cost more. But there should be more jobs in domestic manufacture, leading to more US economic activity.
China, and other lower cost manufacturers have become the factory to the world.Turn that on its head,there will be many repercussions as the world tries to accommodate the changes.

What could possibly go wrong? To quote another Trumpism,"We will see what happens". Which could be code for "I`ve no idea,anything could happen".

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Certainly is the champion of free trade...I think the point was to level the playing field.

This administration, along with past administrations have made mention of unfair trade practices the US faces. The others have sat on their hands and flapped their gums. This is not a status quo administration. Promises made on the campaign trail are trying to be implemented. I am not smart enough to know, if current policy will work, doing nothing seems not to be the answer. Negotiating has not had a great deal of success. Looking at the Chinese markets, it seems they may be feeling more pain than the US. Time will tell.

The big imbalance between US and China comes from China`s ability to manufacture and export at such low cost compared to domestic manufacture. Equalizing prices by imposing tariffs is like "the curate`s egg", good and bad in parts.

It was expected a dampening demand for Chinese product would lower prices on coal and iron ore we sell to China,but at least with iron ore, prices are rising, which doesn`t suggest China is feeling pain. Word here is China is waiting on the next US elections. But as you say, time will tell, and doing nothing is not always an option. Meantime lots of trade relationships will fracture, but so be it.

Chinese demand largely saved Australia from the 2008 catastrophic events in USA and the knock on effects elsewhere.

djmarchand said:

If we place tariffs on imported boats, which AFAIK hasn't happened yet, you can bet that prices will go up on all boats at least as much as the tariff, even though the US made boats will not be subject to the tariff. Simple supply and demand economics.

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Maybe. OTOH, maybe the domestic manufacturers may use their pricing advantage to regain market share lost to Chinese builders? I don’t know much about the industry in general and am only passingly familiar with a handful of manufacturers. It seems to me that if companies such as North Pacific or Helmsman are faced with a significant tariffs, that will provide a boost to Nordic Tug and American Tugs who are so much higher in cost comparatively.

We're lumping a lot of tariffs and a lot of destinations. Plus a lot of unknown.

Here's the known at this time.

Canadian boat dealers are extremely worried as the majority of boats sold by US builders to Canadian dealers are aluminum so they're hit with a double whammy, the material cost importing to the US and the tariff by Canada.

Every inboard or inboard-outboard boat manufacturer in the US who sells also in Europe is feeling pain. They're trying to shift what they can to outboards. This has impacted major builders but also some small custom sportfishing boat builders.

Now, as to all the rest of it, everyone is living with major uncertainty. All pricing is being done right now with the buyer taking full responsibility for any tariffs. A lot of buyers are not willing to do that. The importers of European boats in South Florida are having a decrease in orders, even though there are currently no new tariffs on them.

We face uncertainty on every product we sell. We have no idea what will be hit in the next few months.

BandB said:

We're lumping a lot of tariffs and a lot of destinations. Plus a lot of unknown.

Here's the known at this time.

Canadian boat dealers are extremely worried as the majority of boats sold by US builders to Canadian dealers are aluminum so they're hit with a double whammy, the material cost importing to the US and the tariff by Canada.

Every inboard or inboard-outboard boat manufacturer in the US who sells also in Europe is feeling pain. They're trying to shift what they can to outboards. This has impacted major builders but also some small custom sportfishing boat builders.

Now, as to all the rest of it, everyone is living with major uncertainty. All pricing is being done right now with the buyer taking full responsibility for any tariffs. A lot of buyers are not willing to do that. The importers of European boats in South Florida are having a decrease in orders, even though there are currently no new tariffs on them.

We face uncertainty on every product we sell. We have no idea what will be hit in the next few months.

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And it's particularly difficult with boats because there is typically a long gap between contracting and delivery, and nobody knows how tariffs might change in that time. It's a huge risk to contract a boat today knowing that the actual cost may be 10%, or 15% more, or 25% more when you finally take delivery. Whether it's the buyer, or seller, or both who take the risk, it's a big risk.


But all this is great for the brokerage market....

The metals markets and companies that produce same are a world wide group. Generally the cost of goods sold, capital recovery, shareholder earnings (profits) and revenues received must be in balance for capitalism to work.

As example, US aluminum companies are public companies. Without a solid balance sheet they go under. Chinese production from in country aluminum companies is government controlled and owned. The cost of goods sold is largely irrelevant, the goal is to employ people.

When the cost of goods sold would prove atrocious and non economic in the US, in China that problem is less an issue as the government covers the losses to keep the enterprise going.

Thus tariffs get imposed. It has worked this way worldwide for a very long time. And yes I understand the world wide metals markets by virtue of having worked in the business including experience in China.

The impacts of tariffs on Al boats is as noted by Dave M, not much. The real issue seems, as noted in the press and trawler forum is purely political. The Chinese government would like to see it stay this way.

I read on a Nordhavn site, that a lot of the hardware that is installed, is shipped to China in bond, and the value of those components was deducted from boat value,!when imported and not subject to tax.

MYTraveler said:

My thoughts would be deemed political, so I will bite my tongue.

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Bump. I will add, that all I see here in the PNW is boats and boat related business doing really well.

South African built boats are exempt from US import duty as are many other boats built in countries considered to be less than "first world.) Check with US Customs.

Dave_E said:

Bump. I will add, that all I see here in the PNW is boats and boat related business doing really well.

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Go visit a nearby Canadian boat dealer who sells primarily aluminum boats and you'll see concern.

Or go find a builder who ships a lot of boats to the EU, which I don't know that there are any in the PNW.

BandB said:

Go visit a nearby Canadian boat dealer who sells primarily aluminum boats and you'll see concern.

Or go find a builder who ships a lot of boats to the EU, which I don't know that there are any in the PNW.

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The world is awash in Al finished metal. LME bonded warehouses have over one million tons in inventory. This does not take into account producer or country stocks. Canadian Al boat builders have boat demand, high taxes, high COL and skilled tradesman shortages that are their economic drivers.

Not too mention the current Al glut is hurting Canadian Al metal refining producers. Overall, Canada would benefit greatly from Al price increases, which are not forecast to occur.

sunchaser said:

The world is awash in Al finished metal. LME bonded warehouses have over one million tons in inventory. This does not take into account producer or country stocks. Canadian Al boat builders have boat demand, high taxes, high COL and skilled tradesman shortages that are their economic drivers.

Not too mention the current Al glut is hurting Canadian Al metal refining producers. Overall, Canada would benefit greatly from Al price increases, which are not forecast to occur.

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I didn't say anything about Canadian boat builders, but Canadian dealers who import US boats and now face a 10% tariff. They're the ones indicating a problem and most of the boats exported from the US to Canada are aluminum.

BandB said:

I didn't say anything about Canadian boat builders, but Canadian dealers who import US boats and now face a 10% tariff. They're the ones indicating a problem and most of the boats exported from the US to Canada are aluminum.

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So the Canadian Al boat builders will be happy! Win win eh.

But seriously, the $C vs $US is the big impediment for Canadians buying US products of any kind. Fortunately commodities are priced globally in US dollars so Canada's resource guys are mostly better off the past few years.

sunchaser said:

So the Canadian Al boat builders will be happy! Win win eh.

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The Canadian boat building industry never really recovered from the end of the 80s boom. NAFTA eliminated tarriffs that had previously offered them some protection from US competitors around the same time. The majority of new boats sold here in the last 25 years were built in the US.

Maybe the few remaining builders able and willing to ramp up will have some opportunities, but in general the recent trade disputes have introduced a lot of uncertainty and short term pain.

I should say that I know nothing about the aluminum boat market, except that they're by far the most common craft on the Trent Severn . Pontoon boats rule, apparently. They're tricked out with big comfy chairs and 150 hp motors. But I digress...

My observations are based mostly on larger sailboats but I'm sure it's true for powerboats as well.