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Message From The Editor
Sharing a Position on Tariffs
I have received a number of emails from readers asking about the tariffs and what is likely to happen in the coming months. As far as I know, there is no clear answer at present but here is what we are dealing with.
We now have the results of the US midterm elections and the Democrats have taken control of the House of Representatives. Technically, this comes into force in January 2019.
It's possible that President Trump will change his stance on the tariff war between now and the time that the Democrats get going in January, but I would describe that as a long shot. It seems more likely that Trump will continue on his path for the moment.
The new United States Mexico Canada agreement (USMCA) doesn't seem to be much different from the original NAFTA agreement. But, US milk is already being sold and even advertised in some Canadian markets for example. This was an important win for Trump and the American dairy producers.
The tariffs levied by our own government on American boats being brought into this country were only part of a much broader retaliatory measure by Canada. Even if the Democrats vote down the new USMCA trade agreement with Canada and Mexico, the American tariffs on steel and aluminum may remain in place. The two topics aren't necessarily connected from what I understand.
In terms of timing, it seems unlikely that we would have a resolution to this tariff situation until probably February 2019 and perhaps longer. By then, our industry will have had to commit to ordering boats in order to have them for delivery in the spring of 2019. One very successful Ontario boat dealer pointed out to me that you can't sell a boat that you don't have. We are actively encouraging our Canadian dealers to go ahead and order product.
An important part of this issue is how uneven the tariffs are across the boat business. In some cases, the tariff hits the boat and motor package, but in some cases it only hits the boat, and in some cases the boats are being sent to Canada from countries other than the United States, so there is no tariff. It's not like every new boat went up 10%. Although some boats have risen higher than that due to higher material and parts costs.
After speaking with a great many people about this very important subject, the most common stance is to try and avoid any discussion of tariffs with clients, alter our selling prices accordingly, and in particular, work with our boat builders and OEM suppliers to get their help in mitigating against the tariffs.
It does occur to me that a pleasure craft is a discretionary luxury purchase and while our customers tend to be very savvy individuals, especially around negotiating deals, they can adjust their choice of boat and engine to work within their own budget and probably still get the boat that they would like, or something closely comparable.
Chances are they are buying a boat for a reason and with our otherwise solid economy, low interest rates and high employment levels, they are likely to continue with their plans.
Our customers may be knowledgeable and aggressive negotiators, but at the end of the day, if they want to buy the boat, they'll have to pay the price. The situation is evolving but I doubt we will see any clear direction until the New Year so we have to work on our own best guess at the moment.
Andy Adams, Editor
aadams@kerrwil.com
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Boating Stock Market
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Calendar
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METS Trade Show
November 13 - 15, 2018
RAI Amsterdam, The Netherlands
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Boating BC Conference
November 20 - 21, 2018
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Boating Ontario Conference
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