‘It’s Just Mass Confusion’

The industry braces for supply-chain changes and additional challenges amid multinational tariff disputes

Brunswick Corp., the parent of more than two dozen marine brands, held its earnings conference call for the fourth quarter of 2024 in late January. “At current tariff rates,” the company reported, “we anticipate an annualized impact of approximately $35 million in 2025.”

Brian Swanke, CEO of CWR Wholesale Distribution in Bayville, N.J., which supplies products in more than a dozen categories, had manufacturers trying to use President Trump’s threat of new tariffs as a sales tool. “They came to us and said, ‘If you want to order, you probably want to do it next month, before these tariffs come. Next month, the cost of the inventory could be 20% higher,’ ” Swanke says.

Christophe Lavigne, president of Highfield Boats in Cadillac, Mich., was dealing with his Canadian orders being canceled. “Our American-made boats are going to cost 25% more when they are shipped in Canada,” he says. “This means we are not going to sell any more boats in Canada for a while.”

Peter Barrett, senior vice president of marketing and corporate development at Smoker Craft Boats in New Paris, Ind., says the builder was trying get boats to all 72 of its Canadian dealers by — well, soon. “The deadline has been moving. We got some news today that it was pushed to April, and I just reached out to our congressman’s office, and they said it’s possible that Trump misspoke; it may be March 4,” he says. “So we have changed our production to get all of our Canadian orders out of here by March 4.”

Generally speaking, Swanke told Soundings Trade Only in late February, nobody had a clear understanding of which tariffs might ultimately be imposed, at what rates and on which dates. “Right now, it’s just mass confusion,” Swanke says. “Nobody knows what to do.”

As this issue of Soundings Trade Only went to press, President Trump had announced plans to impose tariffs on imports from Canada and Mexico, a doubling of the tariff on imports from China, a tariff on steel and aluminum imports, and reciprocal tariffs on all countries that impose tariffs and taxes on imports of U.S. goods. Canada and China had announced retaliatory tariffs, Mexico’s president said her nation had multiple plans in place for whatever might happen next, and U.S. Commerce Secretary Howard Lutnick indicated that even he was unsure of how things might shake out just a few days before a key deadline.

“There are going to be tariffs on Tuesday on Mexico and Canada,” Lutnick told Fox News in early March. “Exactly what they are, we’re going to leave that for the president and his team to negotiate.”

Amid those developments, marine business leaders were trying to prepare for just about anything. Rick Reyenger, president of Patrick Industries’ Marine Group, put it like this: “Regarding potential tariffs, we find the situation to be very fluid and will continue to evaluate as more details become available.”

Changes to Exclusions

For boatbuilders like Smoker Craft, the proposed tariffs threatened to create challenges in multiple ways. Not only would tariffs raise prices on U.S.-built Smoker Craft boats sold by Canadian dealers, but tariffs also were expected to hike prices on aluminum extrusion products that are used to build those boats in the United States.

In some cases, during the first Trump administration, certain products could be excluded from tariffs if manufacturers made a case for needing an exception. This time around, such exceptions were being eliminated to make sure the tariffs have the intended effect, lawmakers say. “President Trump successfully used tariffs in the past to grow our economy and protect American jobs. He imposed steel and aluminum tariffs in 2018, and now he is eliminating exceptions countries like China have used to circumvent them,” U.S. Rep. Jason Smith, R-Mo., said in early February.

The result of that tightening on exclusions, according to industry leaders, would likely be price increases on a variety of components and parts used to build boats. “We’re worried about engines being affected, hydraulic steering, ladders and small items such as cleats and bow eyes that we have bought in China over the years,” Barrett says. “The last time we went through this, we had the opportunity to get in there and apply for an exclusion. This time, they’re being very tight on the exclusions.”

Brunswick, in its earnings call, also cited the “absence of benefits from certain exclusions” as a reason for the projected multimillion-dollar impact on the company this year. Highfield’s Lavigne says the president’s stance against exclusions was so firm this time around that his company wasn’t even trying to request them.

“Usually, the concept of an exclusion is to say that I’m buying something from China that is uniquely made in China. I’m not affecting any U.S. jobs. It doesn’t exist in the U.S.,” Lavigne says. “We tried it last time. We said, ‘There are no boats like that made in the USA,’ and we got rejected. This time? Forget about it.”

Frank Hugelmeyer, president of the National Marine Manufacturers Association, told Fox Business in an interview during the Discover Boating New York Boat Show in January: “We need a carved-out approach to tariffs to position the American boatbuilder globally, and we’re looking forward to working with the Trump administration to do just that.”

NMMA also issued a statement about the proposed Canada and Mexico tariffs in early February, saying it was “deeply concerned” because Canada accounts for 51% of total U.S. boat exports and Mexico plays a “critical role” in the marine industry’s massive supply chain. Hugelmeyer also noted that the tariff announcements were coming during the critical peak boat-show season, “in which thousands of American manufacturers of boats, marine accessories and engines are looking to market and sell their products to consumers and other marine businesses.”

Preparations in Place

In some ways, industry leaders said their experience with tariffs during the first Trump administration had caused them to change their supply chains for materials such as aluminum sheets, putting them in a stronger position to weather any tariffs that ultimately get imposed now. “We switched to 100% U.S. aluminum sheets,” Barrett says. “Our vendor, Champagne Metals, helped us do that. They were fantastic. They dragged us in the right direction, so that has been impactful — and keep in mind that we’re building aluminum fishing boats as well as pontoon boats.”

Ryan Smith, group president, North America, at Lippert Components in Elkhart, Ind., says his company had been making similar moves for similar reasons. “For the last few years, we’ve been proactively finding solutions and creative avenues within our supply chain to help our business partners and end consumers while tariffs are being considered across various industries,” Smith told Soundings Trade Only.

Brunswick suggested in its earnings call that not only had it already altered its supply chain, but also that more changes might be coming this year: “We are preparing for a range of scenarios and have many short- and long-term mitigating actions already underway, including continued migration of our supply base, inventory staging and optimization of our facilities.”

At Highfield, Lavigne says he had also switched suppliers in anticipation of tariffs. “Today, we are making boats in Michigan, limiting our importation of Chinese product,” he says. “It’s not a cheap solution — it doesn’t cost less because American workers are paid more, and aluminum is expensive — but I can survive because I am ready for it. I found ways to make boats in the U.S. and stay alive if the tariff situation becomes unbearable.”

Along those lines, he adds, nobody should be shocked or frustrated by what President Trump has been doing with tariffs since his second administration began. “The Trump orders should not be a surprise,” Lavigne says. “He told everybody what he would do, and he’s doing it. I got prepared for it, and I’m ready, but I would prefer that we were not doing it.”

The Consumer Effect

Several industry leaders say that no matter where the tariff percentages land on which countries and products, Americans who want to buy new boats, or retrofit the boats they own, are likely going to have to pay more. “We heard a lot about how China will pay it. Absolutely not. It’s paid in the U.S. by the U.S. importers. It’s not paid by the Chinese company at all,” Lavigne says. “The idea that we’re going to be able to not pass this to the customer, it’s impossible. It’s not going to happen.”

Barrett says Smoker Craft customers also would end up taking a hit on the prices they pay. “Unfortunately, we try our best to keep our prices down for our customers, but we’re going to have to pass this along,” Barrett says. “These tariffs will be impactful.”

Swanke says the cost increases may not affect companies dealing with higher-net-worth customers who want to buy or refit larger yachts, but more typical American boaters may see the increased prices and balk on spending. As a point of reference, according to NMMA, 79% of current boat owners have an average household income of less than $100,000, while 62% earn less than $75,000 per year.

“In the last go-around, we were concerned about the average Joe buying a 17- to 30-foot center console. That person will be very affected by tariffs,” Swanke says. “Maybe they had $5,000 saved up to do a retrofit, and now it’s $7,000. The guy buying a big Viking probably isn’t affected one bit. The average Joe is who’s going to get hit.”

Swanke adds that whatever price increases affect boating-related products and services, they will be in addition to other costs that consumers are also facing with regard to grocery prices and other everyday pocketbook hits. “Whether it comes from egg prices or wherever, we’re seeing it in the news every day,” Swanke says. “I was in Vermont recently and went to breakfast with a group, and we all looked at each other and said, ‘Wow, I didn’t think our breakfast bill would be more than our bar tab last night.’ An omelet was $17. It’s really odd to see those kinds of prices.”

Shifting Attitudes

According to The Conference Board, consumer confidence dropped sharply in February, declining 7 points and registering its largest monthly decline since August 2021. Inflation expectations reflected a mix of factors, according to Stephanie Guichard, senior economist, global indicators, at The Conference Board, “including sticky inflation but also the recent jump in prices of key household staples like eggs and the expected impact of tariffs.

“There was a sharp increase in the mentions of trade and tariffs, back to a level unseen since 2019. Most notably, comments on the current administration and its policies dominated the responses,” she adds.

Swanke says that as expectations continue to fluctuate with every news report, day after day, he’s taking the approach of remaining calm because things will likely change again in another day or two. “There’s been a lot of knee-jerk reactions and pullbacks. There’s been a lot of, ‘Oh, no, tariffs are coming tomorrow,’ and they send us a new price sheet, but then two days later, they say they’re pushing it out,” Swanke says. “Now we know to take a deep breath and relax. We were getting a bunch of price sheets and taking the time to update our systems, and it was wasting a lot of time on our side.”

Barrett says that no matter what ends up happening next, he’s confident that the team at Smoker Craft will be able to weather it. Overall, he adds, the desire to be on the water is not going to change. Companies that manufacture products to fulfill that desire will always figure out ways to adjust.

“My family’s been doing this since 1903, and we’ve seen a lot in this industry, and we’re going to get through it,” Barrett says. “People love boating, we love producing boats, and we’re going to continue to produce boats.”