Shifting Gears

Marine industry professionals say that during the first two months of this spring’s tariff turmoil, the goal was adapting and strategizing with the constantly changing news — amid a first-quarter U.S. economy contraction, faltering consumer confidence and severe swings in equity markets. 

At press time, U.S. tariffs on some goods from China were as high as 145%. Certain goods and some electronics were exempted. Tariffs on aluminum and derivative products stood at 25%, and some country-specific exclusions had been revoked. There was also a 25% tariff imposed on imports from any country that purchased Venezuelan oil, and a 10% universal import tariff on all goods imported into the United States, with higher rates for more than 50 trade partners.

These levels of tariffs are what’s known as “stacking,” which can substantially increase the effective tariff rate. In late April, the Trump administration set forth policies to manage stacking of tariffs on certain products. A tariff on auto parts scheduled to go into effect also covered some parts used in U.S. boat manufacturing. The National Marine Manufacturers Association has urged boatbuilders to review the Harmonized Tariff Schedule for auto parts to check whether their imported parts qualified for exemptions.  

Robyn Boerstling, senior vice president of government relations at the NMMA, told Soundings Trade Only: “The greatest challenge is navigating the uncertainty and unpredictability of shifting tariff policies. The recent rollout of universal tariffs, reinstatement of tariffs on aluminum and steel, the evolving stance toward China, and the lack of clear implementation guidelines are creating a strain on boatbuilders, component suppliers and engine manufacturers.” 

The NMMA was working to prevent retaliatory tariffs that the EU and Canada proposed, she said. The NMMA was also talking with the Trump administration about electronics, copper and semiconductor components, which were granted short-term exemptions, but only temporary ones.

“For the marine industry, this could mean higher input costs, particularly for components like wiring harnesses, GPS units and LED lighting,” Boerstling said. “We are urging the administration to consider permanent relief for marine-specific products that are not in sensitive sectors.”

The NMMA also continues to make clear that 95% of boats sold in the United States are made here, but that manufacturers rely on a global supply chain. “We’re working every day to make sure policymakers understand that,” she said. “While it’s a tough environment, there is strength in our industry’s unity, and NMMA is pushing for a more stable trade policy that provides businesses certainty and supports American jobs and innovation.”

Roger Moore, founder and CEO of Fort Lauderdale, Fla.-based Nautical Ventures Group, said he had a half dozen boats in Poland that were customer-owned, but that he didn’t want to receive. “They’re going to arrive here, and we’ll be upside down in them when we deliver them to the customer,” he said.

Moore runs 11 Florida locations, five of which are retail dealerships across the state. Others are marinas, rigging facilities, a kayak rental, a yacht tender and warehouses. In Palm City, Fla., his crews rig Highfield Boats tenders imported from China.

“We are truly facing some crazy times as it relates to the importation of those tenders that we rig there,” Moore said, adding that the overall situation was “an amazing mess.” 

He was also trying to determine if not mounting engines to vessels would alleviate tariffs on the cost of the engine on imported boats. “As of today, if the engine is affixed to the vessel, it becomes a tariffed boat,” he said. “So we used to do all the rigging here, and we would buy the engines from Mercury, bring in a blank boat, and we would rig it. We may have to go back to that because we can’t possibly bear paying for the importation of a U.S. product attached to a foreign-built boat.”

Christophe Lavigne, president at Highfield USA, said concisely, “This is not good.” 

Lavigne spoke with Soundings Trade Only about tariffs on goods from China: “We know it’s not going to stay there. It can’t. All the clothing and the shoes and all the goods that [people and companies] buy from China will not stay that high.”

He also said there were strategies to work around the tariffs, but they come with risks. “I’ll give you one strategy, which is something we are thinking about,” he said. “If we assume the fact that the situation will evolve and improve, we can consider bringing goods into the U.S. but leave them in a free-trade zone, an FTZ. It’s a risky strategy because if it doesn’t change, you have goods that you cannot afford.

“Nobody will pay 200% tariff on anything — it’s too expensive, and there is no value there,” he added. “The FTZ strategy is an option but could be very costly if the tariff situation does not change and we’re stuck with a bill for a huge shipment of tariffed components.”

These tariffs are hurting small American companies and facilities like the one Highfield operates in Cadillac, Mich., he said: “We have 15 direct employees at Highfield in the U.S., all Americans. We sell to 60 dealers. They all have employees to sell and service the product. We buy EZ Loader trailers. We buy Mercury engines, Perko parts, Attwood parts, electronics and more. We give jobs to, I don’t know, hundreds of people through the process. This is all hurting them in some way.”

Jeff Strong, president of Strong’s Marine on New York’s Long Island, compared what’s happening to a roller-coaster ride.

“Some clients will look at this as a buying opportunity and realize that time on the water with their friends and family is exactly what they need more than ever during these times,” he said. “We have very long and meaningful relationships with the [Marine Retailers Association of the Americas], NMMA, our banks, and boat and engine manufacturers. Constant, collaborative communication to support each other is paramount while, at the same time, being agile to take advantage of any opportunities we can create.”

Strong said that while he believes tariff negotiations will be ongoing for several months, he’s focusing on things that he and his team can control: having “employees and clients who are raving fans of our boating lifestyle and its high importance for family values.”

Ultimately, he said, market forces will dictate a fair and balanced outcome. “It will also drive more innovation in the USA,” he said, “which is always healthy.”

Eric Braitmayer, president and CEO of Imtra, said the company brings products into the United States from about 30 to 40 countries. “In the beginning, a few weeks ago, Vietnam was at one rate, Norway’s at another, and it was really, really challenging for us to try to strategize on what we should do,” he said. 

Imtra is working with suppliers and brokers to identify upcoming effects. “We have started to pay tariffs on some incoming shipments,” he says, adding that Imtra cannot avoid the tariffs. “The way we can help our customers is by accommodating the difficulty of all this, by deciding how to present the information to them so they know if any products they buy from us are affected by the tariffs.”

Talking, as opposed to selling, is what’s happening a lot of the time, he added.

“We’re trying to do what’s right for our customers as best we can without damaging ourselves,” he said. “We try to offer a really high level of service, and we don’t want to do anything that forces us to sacrifice that. But at the same time, we understand our products are often not a cheap date, and we have to be open to the fact that increased costs are going to present real challenges.”

Bob Pappajohn, president and CEO of M&P Mercury Sales in British Columbia, Canada, said that if the trade war escalates, then he expects Canada to impose retaliatory tariffs on American-made boats.

“Let’s say for now we sold a Brand X model for $150,000,” he said. “A 10% tariff adds $15,000 to the price, moving it to $165,000. 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.”

At any time, he said, a paused 25% tariff could be reactivated. “The uncertainty and general chaos move you to the sidelines pretty firmly,” he said. “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.” 

There really aren’t any 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.”

Marie-France MacKinnon, executive director of NMMA Canada, said it’s important to understand that the recreational marine industry is highly integrated across North America. “Disruptions in trade impact everyone,” MacKinnon said. “Most businesses are focused on stability and avoiding further uncertainty.”

NMMA Canada has been making the case that any tariff in this sector would be harmful because of 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. “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.”

Robyn Boerstling photo courtesy NMMA. Marie-France MacKinnon photo courtesy NMMA Canada. Jeff Strong photo courtesy Strong’s Marine.