Marine industry on both sides of North American border feels the heat of U.S. steel and aluminium tariffs and trade war

The marine industry on both sides of the border in North America is warning that the U.S. tariffs on steel and aluminium and the metal trade war are taking a mounting toll on its business.

According to the marine business owners, tariffs and counter tariffs are making the products expensive for them. Andy Blenkarn, owner of Desmasdon’s Boat Works in Ontario said the retaliatory tariffs of 10 per cent Canada imposed on U.S.-made boats have made the products expensive and the cost is also being passed on to consumers.

Bill Yeargin, CEO of Correct Craft, a Florida-based maker of recreational boats also talked about their manufacturing costs going up due to metal tariffs and this has driven prices for the company’s Canadian dealers.

The Canadian government retaliated to US steel and aluminium import tariffs with 10 per cent to 25 per cent tariffs on a long list of U.S. goods worth $16.6-billion. Sources said, the US proposes to impose quotas that would cap the amount of Canadian steel and aluminium crossing the border. But Foreign Minister Chrystia Freeland said the federal government opposes such a quota system and urges for lifting of tariffs without conditions.

Canada allowed importers to apply for rebates of the 10-per-cent tariff, provided the goods were sold to a customer before May 31 and delivered into Canada after July 1.

“The tariff cannot be financed,” Mr. Blenkarn said. “This is the threat to the industry. If you have a dealer with $2-million worth of inventory in the showroom … we have to front, out of our cash when it crosses the border, 10 per cent of our inventory.”

He felt the retaliatory tariffs Canada imposed are not having the desired effect of punishing U.S. exporters.

“It’s not doing what it’s supposed to do,” Mr. Blenkarn said of the tariff. “It is not causing the Americans any pain. All we’re doing is costing the Canadian consumer more, making boating more unaffordable.”

Demand from U.S. customers is strong, said Mr. Yeargin of Correct Craft, which employs 1,300 people at six factories in the United States and makes seven boat brands.  He added that the company was not much affected because the U.S. domestic demand is strong.

However, he admitted to the fact that U.S. tariffs on aluminium and steel have driven up raw material prices for the domestic boat makers. And about 15 to 20 Canadian dealers are forced to pay tariffs on boats that are already rising in price.

“We feel like as an industry we’re getting squeezed from both ends. Our costs are going up, and at the same time we have retaliatory tariffs from Canada and Mexico,” Mr. Yeargin said.

Sara Anghel, president of the National Marine Manufacturers Association, welcomed the Canadian government’s relief measures but said the industry needs the entire tariff gone. She said Canadian marine dealers face a dilemma – order boats now and pay the tariff, or wait out the trade talks and risk missing the key show and spring sales season. She concerned inclusion of such a basic recreational product in the tariff list.