Wednesday, July 18, 2018

Trump's trade war claims America's boat builders and RV makers as victims

America’s boat builders and recreational vehicle manufacturers are each fearful the Trump Administration’s new tariffs will erode profits, stifle growth, and create unemployment within their respective communities.

Indeed, both recreational-dependent industries are seeing the cost of manufacturing goods all ready escalating with no ceiling in sight. All due to the addition of tariffs on imported aluminum and steel for starters.

And at the other end of the product pipe line are retaliatory extra charges being assessed on finished goods. Canada, Mexico and the European Union are all attaching their own punitive import taxes on boats shipped from the U.S. And those markets account for fully 69 percent of all manufactured boats exported from this country, industry spokesmen say.

More specifically the U.S. recreational boating industry says it is facing a triple threat from tariffs on steel and aluminum, as well as anti-dumping claims on what are called countervailing duties on Chinese aluminum sheet, along with tariffs on nearly 300 marine related products.

The negative impact of such add-on fees, tariffs and the like could result in a loss of up to $1.7 billion for the boat-building industry alone, says the National Marine Manufacturers Association.

In effect, the Association – along with the European Boating Industry trade organization and the International Council of Marine Marine Industry Associations – collectively say their industry is being caught in the middle of economic trench warfare, “with extremely serious consequences for the sector on both sides of the Atlantic.”

President Trump’s recent announcement to impose a worldwide 10-percent import tariff on aluminum and 25-percent tariff on steel has faced criticism abroad, including a proposal by the European Union to put a range of US made products, including recreational vessels, on a retaliatory tariff list,” the three partners say in a joint communique.

In the U.S., the recreational boating industry contributes $38.2 billion in gross domestic product, supports 35,000 businesses and 650,000 direct and indirect jobs, the partnership says in hammering home the economic value of their operations.

Thus any additional cost on metals will drive up prices and drive away buyers, the industry says.

Aluminum is a critical raw material for boat and marine component manufacturing, and increased costs for US manufacturers to source this product will disrupt sales to a pontoon and aluminum fishing segment that accounted for $3 billion in U.S. sales and 110,000 boats,” says the three organizations also.

Using history as a backdrop, the three groups note that a similar trade war in 2002 under the-then George H.W. Bush Administration saw a cascading effect that caused a loss of some 200,000 marine-related jobs in this country.

There is no winner in a trade war,” the marine industry lobbying triumvirate says.

We have in the past expressed our subscription to the idea that mutually beneficial economic growth is achievable through tariff elimination, simplified certification procedures and internationally harmonized standards,” the partners add.

We reiterate our conviction that a reasonable and balanced partnership between the USA and the EU, which does not threaten growth, jobs and innovation, is the only sustainable way forward.”

Alarmed as well is this country’s recreational vehicle industry, an economic segment that interestingly enough has very strong ties with Indiana. That is the state in which Vice President Mike Spence hails from and for which he served as governor prior to being selected by Trump to serve as his second in command.

Indeed, Indiana’s strong connection to the RV industry is reflected in Congress. The U.S. Senate’s bipartisan “RV Caucus” - whose purpose is to promote the industry within Congress - is co-chaired by Indiana Senator Joe Donnelly with that state’s other senator, Todd Young, also being a member. On the House side, Indiana U.S. Representative Jackie Walorski is co-chair of its “RV Caucus” with four other Indiana House members also serving on the body.

Right now, manufacturers are concerned that the tariffs could hurt the RV market by increasing their costs and forcing them to raise prices. RV makers are trying to hold the line on price for now, but that becomes more difficult the longer the tariffs remain in place,” Kevin Broom, spokesman for the Recreational Vehicle Manufacturers Association, said to this reporter. 

The short explanation is that tariffs on steel and aluminum negatively impacts RV production in the U.S. in several ways. Among them are increasing production costs both for RV manufacturers as well as their suppliers, the Association adds.

Yet even before the tariffs were implemented, domestic steel and aluminum producers were increasing their prices to downstream RV industry users, by amounts between 10 and 30 percent, Broom said as well.

Expanding on the subject, the RVMA added that “the scope of the steel and aluminum tariffs that have been enacted is far too broad to have the intended effect of curbing abuses by certain countries, and will only create new challenges for American businesses to the benefit of foreign competitors.”

And as if the additional cost of raw metals was not enough, prices to the consumer on RV models at retail in March were “up 8.5 percent versus the same time last year” Broom says.
Not surprisingly therefore the RVIA “opposes increased steel and aluminum tariffs which increase the cost to manufacture RVs and their components.”
As for what appears not to be impacted - at least for now, anyway - is the cost of imported outboard engines unless they are assembled as part of a packaged item. In which case the additional expense is the result of the tariffs on imported metals.
Spokesmen for both Honda Marine and Yamaha Marine told this reporter at the time this story was written that they are unaware of any additional levy or tariff on their respective outboard engines.
Similarly, a spokesman for the National Shooting Sports Foundation said his organization's members are not experiencing any new tariff or duties being applied to handguns, rifles and shotguns being imported into the United States.
- By Jeffrey L. Frischkorn

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