“Canada is the largest customer for American-made boats, accounting for 51% of total U.S. boat exports,” NMMA president and CEO Frank Hugelmeyer said in February, when tariff news first hit.
Figures from the National Marine Manufacturers Association put the U.S. export market for boats at $1.9 billion in 2023, driven by inboards (up 33.4%) and sterndrives (up 20.1%), amounting to nearly $1 billion in sales to Canada. NMMA reported that the total value of U.S.-manufactured boat and engine exports increased 4% to $2.6 billion in 2023, and those products make up a substantial share of the boats and engines sold in the Canadian market.
Bob Pappajohn, president and CEO of British Columbia-based M&P Yacht Centre and M&P Boat Centre, knows well the trouble those figures may spell for his businesses and the greater economy. Pappajohn sells a lot of U.S.-built boats at his dealerships. M&P Boat Centre sells boats smaller than 30 feet, with locations in Burnaby and Nanaimo; the brands it carries include ATX, Bayliner, Beneteau, Boston Whaler and Chris-Craft. In the early 2000s, Pappajohn expanded with a Yacht Centre in Vancouver, whose offerings include Sea Ray, Sunseeker, Prestige and Swift Trawler.
Currently, there are no retaliatory tariffs from Canada on U.S. boat imports, and earlier this week the Canadian government announced a six-month reprieve on tariffs on goods imported from the United States that are used in Canadian manufacturing, processing, and food and beverage packaging, as well as other essential industries, which may bode well for easing tensions between the nations. Also, the European Union yesterday announced a 90-day suspension of tariffs on U.S.-built boats, until July 14, amid ongoing trade talks. However, the uncertainty has hit hard the relations between America and its trade partners.
“If the trade war escalates,” Pappajohn told Trade Only Today, “then Canada has said that American-made boats and RVs, among other items, are the next targets of retaliatory tariffs.
“Let’s say for now we sold a Brand X model for $150,000,” he continued. “A 10% tariff adds $15K to the price, moving it to $165K. That might put some consumers out of their budget. But more often, the consumer just doesn’t want to pay it on top of our 12% current sales tax. That puts a total of 22% on top of the selling price, and people just don’t want to pay that amount.
“And the tariff that is in pause is actually for 25%,” Pappajohn added. “And at any time, that could be reactivated without any notice. The uncertainty and general chaos move you to the sidelines pretty firmly.”
With no clear direction, Pappajohn has not ordered anything for his dealerships since April 2, the Trump administration’s so-called “Liberation Day.”
“We are waiting nervously to see what happens next,” he said. “Canada has a federal election on April 28, which also weighs on our decisions. So we are firmly on the sidelines for now. An escalating trade war will do significant damage to our economy, the global economy and to demand for discretionary, big-ticket leisure items.”
Earlier this week, the Bank of Canada presented two forecast scenarios for the Canadian economy. In the first scenario, according to a Bloomberg synopsis of those forecasts, most tariffs are negotiated away, but uncertainty still weighs on activity, causing GDP growth to stall and inflation to drop. In the second scenario, the imposition of tariffs leads to a “significant recession” in Canada.
“Our current inventory is being offered at exceptional pricing discounts, and the replacement costs are significantly higher,” Pappajohn said. “Unfortunately, that is not producing much retail activity currently.”
The larger cascading trouble, as forecast by Bank of Canada as a possibility, is a breakdown not only in the supply chain between the trading partners, but a breakdown in consumer relations between the countries, and Pappajohn sees evidence of that already.
“When you are attacked in a trade war that you didn’t start and don’t want, it is pretty tough to feel good about supporting your attacker,” Pappajohn said. “But the larger story is a surge of Canadian patriotism, with consumers rallying around Canadian-made products if there is a home-grown option.”
There aren’t many options for “Canadian-made” in the fiberglass segment, Pappajohn said. “So people are either doing nothing, buying used boats instead, or considering European options. Canadian aluminum-boat manufacturers are seeing an increase in market share, for sure.”
“Canadian manufacturers are closely watching the situation,” said Marie-France Mackinnon, executive director of NMMA Canada, “but it’s important to understand that our marine industry is highly integrated across North America. Disruptions in trade impact everyone. Most businesses are focused on stability and avoiding further uncertainty.”
Mackinnon told Trade Only Today that NMMA Canada has been working actively with officials to make the case that any tariff in this sector would be harmful due to the deeply integrated nature of the supply chain and the shared economic benefit of free trade.
“Summer is short, and our goal is to facilitate and support ways for Canadian consumers to get on the water,” Mackinnon said. “Like most businesses and investors across Canada and the U.S., there’s a high degree of uncertainty, and it gets in the way of growth. That uncertainty is not good for business, nor for serving opportunities for health, wellness and the enjoyment of the outdoors. A trade war benefits no one — it disrupts supply chains, raises costs and undermines investment.”
