Tariffs on Chinese built boats?

[BandB]

No, it was Carter. It almost destroyed the American boat and general aviation industry. As raising taxes always does.

Except Carter had been out of office for 10 years. Please people, get your facts straight.

 

[slowgoesit]

Why let mere FACTS get in the way of a provocative post?!?

 

[N4061]

I recently heard that even a used boat originally built in China and being resold in the USA may be liable for the import tax upon its sale. Anyone heard about or experienced this?

John T.

 

[Comodave]

Where did you hear that? Was it a reputable source? I don’t know for sure but I would be surprised if they could charge a tariff on a used, already imported boat.

 

[Old Sea Dog]

Just state tax in FL where we purchased our '79 GB 36. Documentation was transferred Then $10 in MD for the registration sticker.
FL is our main residence. Summer place near Chincoteague VA. Boat berthed in Crisfield MD.

 

[twistedtree]

I recently heard that even a used boat originally built in China and being resold in the USA may be liable for the import tax upon its sale. Anyone heard about or experienced this?

John T.

I don't believe so, at least not typically. Import Duty is a one time thing on initial import. The only exception that I have heard of, and I'm not convinced it's real or correct, is that if a duty-paid boat is subsequently registered in another country, then brought back into the US, it might be subject to duty again. But the more I think about it, I don't think that's correct. I know people who own duty-paid boats, but they are registered in other countries. These boat's were then sold in the US and registered in the US without issue because the Duty was already paid. One recommendation is to get and retain documentation of duty paid if you import a boat so that you are another owner can show it's been paid.

 

[Steve DAntonio]

I'm not a tax attorney, however, I am pretty certain that is true if the import duty was never paid, if the vessel was registered in Canada or under another flag for instance, and a US buyer is purchasing and not foreign flagging. It would be due on the current value of the vessel, and excluding the US materials and labor, not the entire value (true of new Chinese-built vessels as well).

So, if resold in the US and the import duty was already paid, then no additional duty is due, only if it was never paid and is being US flagged.

For all countries other than China there is a 1.5% duty coming into US, again on non-US components and labor (for the China tariff it's calculated specifically on Chinese materials and labor). So for for China built vessel imported to US it's 26.5%, again on the non-US portion/Chinese material and labor. Customs brokers can calculate these values.

If it is a USCG documented vessel it's almost always an indication of a vessel with duty paid, but not guaranteed.

On a new vessel it's typically calculated on the wholesale price, i.e. builder's cost.

The CBP-7501 (Entry Summary) is the customs document that proves duty was paid. If you are buying a new vessel, built overseas, you should absolutely ask for a copy of this, and you can provide it when selling the vessel. If you are buying a used vessel built overseas you can ask for this, however, in most cases it's not available (brokers are not nearly aware enough regarding this issue in my experience). These docs are typically provided to the importing broker/dealer.

I recently had a client who was buying a Chinese-built used vessel, it was originally imported through Canada, then purchased by an American, and the duty was never paid, so my client had a choice, pay the duty, get the seller to pay the duty, or get the seller to reduce the selling price to cover the duty. It was a negotiation.

I would verify all with an attorney who specializes in yacht (and jet) import duties.

 

[N4061]

Import Tariff Taxes

I recently had a client who was buying a Chinese-built used vessel, it was originally imported through Canada, then purchased by an American, and the duty was never paid, so my client had a choice, pay the duty, get the seller to pay the duty, or get the seller to reduce the selling price to cover the duty. It was a negotiation.

I would verify all with an attorney who specializes in yacht (and jet) import duties.

Steve, for what it's worth I agree with your understanding and was told the same thing from a very reliable broker. So, for anyone purchasing a used boat built in China after 2017 (tariff imposed in 2018) they may want to look close at this tax. I'm also not a tax attorney and no expert.

John T.
Nordhavn 4050, 4061, 3522 - previous owners
John

 

[bowball]

First, there was no additional tariff added to boats from China. The current tariff is 1.5% if imported into US.

Second, there are plenty of boats built in China, some in Taiwan, some in Malaysia. The Chinese builders sales in the US remain good although hurt some by the pandemic. Horizon, Cheoy Lee, Outer Reef are doing well as are others.

Has it really been just over a year since they last visited. I miss their comments.

 

[bowball]

I don't believe so, at least not typically. Import Duty is a one time thing on initial import. The only exception that I have heard of, and I'm not convinced it's real or correct, is that if a duty-paid boat is subsequently registered in another country, then brought back into the US, it might be subject to duty again. But the more I think about it, I don't think that's correct. I know people who own duty-paid boats, but they are registered in other countries. These boat's were then sold in the US and registered in the US without issue because the Duty was already paid. One recommendation is to get and retain documentation of duty paid if you import a boat so that you are another owner can show it's been paid.

I believe that you were correct about reimporting it and duty owed again, at least when I was researching it a few years ago. Canada is different and it only gets paid once.

 

[kthoennes]

It's funny, before I got to the point in life where I could realistically shop for a big(ger) boat, I would read BOAT magazine and noticed those notations in tiny fonts in superyacht sales listings that would say, "*Not for sale to U.S. residents while in U.S. waters." I never understood what possible arcane, green-eye-shade, regulations-gone-amok, free-market-chilling reasons there could be for such a statement. The more I swim around on this topic and browse larger boats, ah yes, now I get it.

 

[Comodave]

I recently heard that even a used boat originally built in China and being resold in the USA may be liable for the import tax upon its sale. Anyone heard about or experienced this?

John T.

This is the post that brought the old thread to life again. As the poster says the question is about a boat built in China and previously brought into the states and resold in the states is another tariff due. If the boat had tariffs paid when it was originally imported, as they should have been, and then it is resold in the states how could another tariff be due. I don’t see how that would be possible. I bought a boat built in Taiwan several years ago and I didn’t have to pay any tariffs because the original owner that bought it from Taiwan paid the tariffs. If this were the case then every time someone bought a foreign built boat they would be paying a tariff.

 

[Shrew]

I recently heard that even a used boat originally built in China and being resold in the USA may be liable for the import tax upon its sale. Anyone heard about or experienced this?

Nonsense!! There has never been a precedence for a 'look back' to impose a tariff rate increase on an import retroactively. Once it's imported, it's imported.

Please provide references or its merely conjecture.

 

[RT Firefly]

Greetings,
Mr. S. When we purchased our 1979 Cheoy Lee some 20 years ago we would have been on the hook for the import duty from 1979 IF we hadn't found a copy of duty being paid. The previous owner didn't have it and the records of the original importer (Rex Yachts) had been destroyed by fire. A GREAT registration company was able to dig it up for us. Can't remember who...

 

[KMAL]

I recently heard that even a used boat originally built in China and being resold in the USA may be liable for the import tax upon its sale. Anyone heard about or experienced this?

John T.

Only if flagged off shore and then imported at the time of re-sale. If the boat was originally imported then it does not need to be imported again. The buyer will pay applicable sales taxes on the second sale.

 

[Steve DAntonio]

(Updated version of my original post on this subject in 2023)

This can be a complex, nuanced subject, if in doubt (and maybe even if you are not in doubt) consult with an attorney who specializes in this type of law.

Import duty for all countries, including China, is 1.5%, plus fees amounting to about 0.3%. This has not changed.

Duty, tariff, and tax are all distinct from each other.

New and brokerage vessels (SEE NOTE BELOW) are subject to duty and tariff if it was never paid, or if the vessel was subsequently registered outside the US, and imported into another country, which voids the duty, and the tariff if applicable.

Just because a vessel is USCG documented, this doesn’t prove that the duty/tariff was paid.

Proof the duty (and tariff if applicable) was paid when the vessel was first registered in the US, should be part of any brokerage purchase of a vessel built in China. The original entry summary is the key document. This would have been issued when the vessel originally was imported into the US and the name of the form, called a consumption entry, is CBP-7501.

If you cannot provide or obtain this, and CBP decides to enforce it, there is a possibility that the full current tariff (25% + another 10% now) if applicable, and duty could be imposed on the current market value of the vessel. This is true irrespective of whatever may be going on with China tariff fluctuation at the moment. Some builders will retain this CBP document, or you may be able to obtain if from the original import customs broker when it arrived in the US, so you may be able to go back to them to obtain the proof that duty and tariffs were paid at the time of the first US entry/importation.

It's worth noting, at least for new vessels, the tariff is not imposed on the sale price of the vessel, it is imposed on the Chinese portion, i.e., Chinese labor and materials (if there are other materials in the vessel that are from a country that is subject to a tariff, those too may be included). It varies from builder to builder; however, this may effectively equate to about 8% of the sale price when the tariff was 25%.

When you purchase a new vessel, imported into the US, you should get a copy of the aforementioned CBP document.

Again, if there is any doubt, consult with a maritime attorney who specializes in vessel registration, flagging, duty, and tariff.

NOTE: To my knowledge, a brokerage transaction in itself doesn’t trigger or set in motion any review of the “duty/tariff paid” status of the boat. Confirming (as you stated) that the duty/tariff has indeed been paid is just good workmanship to prevent troubles later if somehow there is a challenge.

 

[KMAL]

(Updated version of my original post on this subject in 2023)

This can be a complex, nuanced subject, if in doubt (and maybe even if you are not in doubt) consult with an attorney who specializes in this type of law.

Import duty for all countries, including China, is 1.5%, plus fees amounting to about 0.3%. This has not changed.

Duty, tariff, and tax are all distinct from each other.

New and brokerage vessels (SEE NOTE BELOW) are subject to duty and tariff if it was never paid, or if the vessel was subsequently registered outside the US, and imported into another country, which voids the duty, and the tariff if applicable.

Just because a vessel is USCG documented, this doesn’t prove that the duty/tariff was paid.

Proof the duty (and tariff if applicable) was paid when the vessel was first registered in the US, should be part of any brokerage purchase of a vessel built in China. The original entry summary is the key document. This would have been issued when the vessel originally was imported into the US and the name of the form, called a consumption entry, is CBP-7501.

If you cannot provide or obtain this, and CBP decides to enforce it, there is a possibility that the full current tariff (25% + another 10% now) if applicable, and duty could be imposed on the current market value of the vessel. This is true irrespective of whatever may be going on with China tariff fluctuation at the moment. Some builders will retain this CBP document, or you may be able to obtain if from the original import customs broker when it arrived in the US, so you may be able to go back to them to obtain the proof that duty and tariffs were paid at the time of the first US entry/importation.

It's worth noting, at least for new vessels, the tariff is not imposed on the sale price of the vessel, it is imposed on the Chinese portion, i.e., Chinese labor and materials (if there are other materials in the vessel that are from a country that is subject to a tariff, those too may be included). It varies from builder to builder; however, this may effectively equate to about 8% of the sale price when the tariff was 25%.

When you purchase a new vessel, imported into the US, you should get a copy of the aforementioned CBP document.

Again, if there is any doubt, consult with a maritime attorney who specializes in vessel registration, flagging, duty, and tariff.

NOTE: To my knowledge, a brokerage transaction in itself doesn’t trigger or set in motion any review of the “duty/tariff paid” status of the boat. Confirming (as you stated) that the duty/tariff has indeed been paid is just good workmanship to prevent troubles later if somehow there is a challenge.

I would add to this as follows: if the boat has not been imported to the US previously: tariffs will be based on current market value but may be calculated on % of Chinese content. In speaking with an attorney on this subject - he indicated that most China built boats (when new), are circa 50% China built (labor and materials) - the remaining 50% is offshore - say Cummins engine, electronics, other gear. So on a $500k boat - you would prospectively pay tariffs on $250k and taxes on the full amount.

 

[Steve DAntonio]

I would add to this as follows: if the boat has not been imported to the US previously: tariffs will be based on current market value but may be calculated on % of Chinese content. In speaking with an attorney on this subject - he indicated that most China built boats (when new), are circa 50% China built (labor and materials) - the remaining 50% is offshore - say Cummins engine, electronics, other gear. So on a $500k boat - you would prospectively pay tariffs on $250k and taxes on the full amount.

My understanding is that the adjusted for Chinese content tariff schedule is not possible on a used vessel, making those calculations on used gear, with no invoices, would be very difficult and risky. I believe, and I may be wrong, for a used vessel being imported for the first time, it is subject to the full tariff on the market value in force at that time. Also, and this can vary from builder to builder, 50% Chinese "content" sounds high to me.

 

[KMAL]

My understanding is that the adjusted for Chinese content tariff schedule is not possible on a used vessel, making those calculations on used gear, with no invoices, would be very difficult and risky. I believe, and I may be wrong, for a used vessel being imported for the first time, it is subject to the full tariff on the market value in force at that time. Also, and this can vary from builder to builder, 50% Chinese "content" sounds high to me.

I do not know definitively how the tariff is calculated on a used boat being imported - if off of market value - the tariffs could significantly exceed the tariffs that would have been collected on the original import from the factory. I will ask my attorney this question specifically as it would affect my own consideration of flagging a new purchase offshore. On the boat I am building currently - the allocation of Chinese Vs US/Other costs is slightly over 50% - which my attorney indicates falls in line with his experience. I believe, for the builder/importer I am working with, that it is fairly easy for them to break down origin of content as much of the equipment going into the boat is purchased stateside and shipped to the manufacturer in containers. All interesting as we try to navigate this new world. In my case - the tariffs in place at the time I contracted for the boat were included in the build price. I did inquire of Nordhaven as I was considering one of their models - simply, they would not deal with the matter and indicated that tariffs would simply be my 100% risk. Either way - I pay. But all said, not as scary or prohibitive as the headline numbers might indicate. In today's environment, I can say I would make the same decision again. Now the remaining question is do I import into the US or into the Cayman or Marshal Islands - or, do I incorporate ownership into Delaware..... All legal alternatives with various applicabilities dependent on facts. Clearly, options that require good advice from someone more qualified than I

 

[Mako]

@KMAL it's tough to even keep up with the current total tariff on Chinese boats. With the additional 10% what are we looking at now... 36.5% or higher? Plus the $100k to have it delivered to North America.

Since you're building a new custom boat, let's assume that it's "yours" and that resale isn't your biggest concern. At this point you may wish to consider: (1) register it offshore and therefore rely on your 1 year cruising permit when in the US; (2) install a mechanical engine and generator. CCEC or DCEC Cummins China can provide you, as can Doosan Korea.

If you're going for #1 then why in the world would you install an electronic engine, right?

 

[KMAL]

@KMAL it's tough to even keep up with the current total tariff on Chinese boats. With the additional 10% what are we looking at now... 36.5% or higher? Plus the $100k to have it delivered to North America.

Since you're building a new custom boat, let's assume that it's "yours" and that resale isn't your biggest concern. At this point you may wish to consider: (1) register it offshore and therefore rely on your 1 year cruising permit when in the US; (2) install a mechanical engine and generator. CCEC or DCEC Cummins China can provide you, as can Doosan Korea.

If you're going for #1 then why in the world would you install an electronic engine, right?

It is tough to stay up on these matters - especially if you are not in the thick of it. The reality is the additional 10% tariff will impact my total cost on the boat less than 3% - still money of course, but not meaningful in the scheme of things. Shipping - well, that is simply a fact of life for me as all of the boats I was seriously contemplating required shipping (China, Taiwan, Turkey, Netherlands). I did consider one locally built US boat that matched the quality of the offshore boats - but of all things, to much beam for my slip. And yes, fun to think about a pure mech engine - I have one know, a Lugger/John Deer that is unstoppable and starts instantly - a real beauty. You are correct about resale - not my biggest concern, and interestingly, here in the NW you in effect broaden your market to Canadian buyers with a vessel that has not been imported to the US. But all said - probably my biggest consideration is that I am part of a community - I do care about my State and my boating community and believe that I should support it - even if a bit costly...

 

[more]

I'm wondering if the Chinese government is paying all or part of the tariff? There are a number of areas where the government is paying to keep China competitive and their people working.

Ted

you are funny guy. Chinese government pay your, sorry not the Trump tariff you pay.

 

[KMAL]

I'm wondering if the Chinese government is paying all or part of the tariff? There are a number of areas where the government is paying to keep China competitive and their people working.

Ted

No - 100% on US purchaser or importer.

 

[O C Diver]

you are funny guy. Chinese government pay your, sorry not the Trump tariff you pay.

It was a common practice for the Chinese government to lower the price on a product to keep it plus the USA tariff below the domestic manufacturers cost. Once the USA manufacturer was out of business or stopped producing that product, the Chinese government could raise the price of the product to make a profit. Another tactic was currency manipulation to keep USA manufacturers from being competitive. If it weren't for the Jones Act, there probably wouldn't be any commercial ship, tug, and barge builders in the USA anymore.

Ted

 

[more]

It was a common practice for the Chinese government to lower the price on a product to keep it plus the USA tariff below the domestic manufacturers cost. Once the USA manufacturer was out of business or stopped producing that product, the Chinese government could raise the price of the product to make a profit. Another tactic was currency manipulation to keep USA manufacturers from being competitive. If it weren't for the Jones Act, there probably wouldn't be any commercial ship, tug, and barge builders in the USA anymore.

Ted

Chinese government don't export anything,

 

[more]

nother tactic was currency manipulation to keep USA manufacturers from being competitive. If it weren't for the Jones Act, there probably wouldn't be any commercial ship, tug, and barge builders in the USA anymore.

Ted

Last time the USA be competitive in late 1980-90. in era of early PC Sea RAY,bayliner when Brunswick produced over 3000 yachts yearly. i don't see Made in USA product in market from long time,or you go in Wall mart and try find something made in USA. Also in Croatia is hard to find something for boat made in Croatia .

 

[O C Diver]

Chinese government don't export anything,

China controls everything any business in their country does.

Xi's most important job is keeping people employed. So it's all about trade, and he controls everything.

Ted

 

[KMAL]

It was a common practice for the Chinese government to lower the price on a product to keep it plus the USA tariff below the domestic manufacturers cost. Once the USA manufacturer was out of business or stopped producing that product, the Chinese government could raise the price of the product to make a profit. Another tactic was currency manipulation to keep USA manufacturers from being competitive. If it weren't for the Jones Act, there probably wouldn't be any commercial ship, tug, and barge builders in the USA anymore.

Ted

China controls everything any business in their country does.

Xi's most important job is keeping people employed. So it's all about trade, and he controls everything.

Ted

Nothing like a $1-Trillion surplus and 17% growth in exports despite 8 years of 25% tariffs. Xi does control and China does export (the government) - lest we ignore the many state owned companies that both manufacture and export.

 

[BruceK]

Nothing like a $1-Trillion surplus and 17% growth in exports despite 8 years of 25% tariffs. Xi does control and China does export (the government) - lest we ignore the many state owned companies that both manufacture and export.

Interesting discussion. Australia, and everyone else, is facing 25% tariffs on exports of steel and aluminium (you spell it aluminum) to USA. Bluescope, our large steel producer also operates in and makes steel in USA, employing 4000 people to do it.
Anyway, our Prime Minister (who Xi calls "handsome boy" [he`s definitely absolutely neither]) has asked your President to exclude Australia from the 25% tariff again, as he did last time. We buy way more from USA than we sell, so it`s a real possibility.

 

[more]

Interesting discussion. Australia, and everyone else, is facing 25% tariffs on exports of steel and aluminium (you spell it aluminum) to USA.

yupi we close all our steel factories lucky we dirty industry is in USA,Australia and normally china