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European tariffs on U.S. Boats

Discussion in 'General Yachting Discussion' started by Cruz, Jun 21, 2018.

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  1. Cruz

    Cruz Member

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  2. Capt J

    Capt J Senior Member

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    Great......this is going to effect a few US builders for sure......
  3. Capt Ralph

    Capt Ralph Senior Member

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    It's going to effect lotts of things.
    I think when the dust (mud?) settles, it will be back to SSDD.
  4. Fishtigua

    Fishtigua Senior Member

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    Europe used to import thousands of American bow-riders and runabouts but that market has now dried-up due to the cost of Gas. Diesels and 4stroke outboards now rule.

    What could hit the market is in engine sales from the likes of Cat and Cummins. Luckily they both have European plants to produce certain lines.

    Thankfully I don't ride Harleys or drink Jim Beam.
  5. PacBlue

    PacBlue Senior Member

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  6. olderboater

    olderboater Senior Member

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    The trade war may impact us in many ways we've yet to even realize. Expect to see prices on many consumer items rise quickly and to see exports of many products decline quickly putting US manufacturers in greater peril. This has turned into US against the world and there may have been a time US had the power to win that battle but that time is long gone. Right now there is huge uncertainty but the stakes in this trade war are escalating daily.

    One question that has arisen is what about contracts on boats already on order. Was the price quoted FOB US or Europe? What does the contract say. Can the buyer cancel? Rest assured many US boat manufacturers are worried right now about an immediate loss of business. Lawyers are being consulted. Look at someone like Hatteras. My guess is that 25% of their boats are exported and at least 15-20% are exported to Europe. Can they afford a 15-20% loss of business? Can they absorb the tariff? This is a very serious and immediate issue.

    I've not done business in such a period of major price uncertainty as we've now had tariffs and retaliatory tariffs and additional retaliatory tariffs threatened to be followed by more retaliatory tariffs. We're seeing emotional and irrational tariffs not based on facts or reality at all with quotes made to justify, but the "facts" expressed in those justification lies.
  7. Capt J

    Capt J Senior Member

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    There may be ways to get around that. People take possession in the US under a LLC or Corp. Then it goes into Europe as a used boat. IDK.
  8. olderboater

    olderboater Senior Member

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    Nope.....won't work.
  9. olderboater

    olderboater Senior Member

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    Example of impact. Harley Davidson is moving some production out of the US due to the new tariffs raising the tariff on import to the EU or motorcycles from 6% to 31%. This is an average of $2200 per bike. They will absorb the hit the remainder of this year, taking a charge to their profits of $30 to $45 million.

    Exact same situation US boat builders face.
  10. olderboater

    olderboater Senior Member

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    Canada is the biggest importer of US boats and has placed a 10% tariff on all. Mexico has placed a 15% tariff and while not overall a huge importer does import a lot of boats from South Florida. Europe has placed a 25% tariff on all boats from the US except outboard powered and inflatables.

    The builders who have discussed it have stated that it's been about 20% of their business (a range of 10-25%). The mass builders talked to (Glastron, Larson, Marquis, Sea Ray types) have indicated they expect nearly all imports to the EU to stop.

    One other very impacted segment and that is builders of Aluminum boats in the US. Most boats shipped to Canada are aluminum. These builders are first hit with the 10% tariff on aluminum they import and then the 10% tariff by Canada.

    Note that the timing of Brunswick's announcement (separate thread) on keeping Sea Ray but discontinuing their yachts is not coincidental. There weren't a lot of buyers lining up but the value of Sea Ray in a sale just dropped dramatically with this tariff.

    What little life Sea Ray had, just was exhausted by this tariff. 1st Casualty. More to come. Rest assured there is panic right now in Philadelphia and New Bern. This reverses all the progress Hatteras has made in the last two or three years.
  11. FlyingGolfer

    FlyingGolfer Member

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    I am hoping the President is just using tariffs - and the threat of them - to jawbone countries into opening their markets. I fear he believes tariffs are a good idea, which will hurt the entire world. If this trade war escalates, I will keep plenty of cash on hand to buy stocks at the bottom. A sad way to make money.
  12. olderboater

    olderboater Senior Member

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    Some builders are experiencing a nightmare on sales and builds in process. European buyers saying they are not going to absorb the tariff, builders and sellers saying they are not going to. There are boats that the builders don't know whether they should continue working on.

    Imagine right now being a Sea Ray dealer in Spain. Marina Marbella has 16 locations in Spain, Portugal, the UK and Morocco. Their two largest selling brands are both US built. One is Sea Ray which is discontinuing all their larger boats.

    This is going to be devastating to a lot of businesses.
  13. FlyingGolfer

    FlyingGolfer Member

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    I suppose Americans will be forced to buy American boats and Europeans will have to buy European. At least until the tariffs are rescinded. Uncertainty about all this must be bad for the people running the boat manufacturing companies and their vendors. Ordering raw materials would be a nightmare right now. Layoffs are looming no doubt. Trade wars have always been counterproductive.
    Will this strengthen the used yacht market?
  14. olderboater

    olderboater Senior Member

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    Understand the tariffs have hit a lot of components too. I don't see this helping the used market as much of it is exports too.

    Ordering raw materials, quoting prices, all a nightmare for many industries. I spoke to an importer in another industry today. They're pricing their line for orders but they have no idea what their product is going to cost them.

    Boat manufacturers have either priced or are in the process of pricing their 2019 lines. They don't know how.

    One person I respect greatly in the industry has talked to many over the last few days. The most common prediction was that this would be the second biggest blow ever for the industry, worse than the luxury tax episode but not as bad as the recession in 2008.
  15. FlyingGolfer

    FlyingGolfer Member

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    I believe this trade war will be called off soon by both sides. Can’t be soon enough.
    Does Westport sell mainly to US customers?
  16. olderboater

    olderboater Senior Member

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    Right now the only talk is about escalating this rather than calling it off.

    Mainly, yes. However, that doesn't mean they're not impacted both in costs and potential sales. I don't care if it's only one sale, you lose a $43 million sale it's a significant loss.

    Now a boat like a WP 164 is easier to work around. Document in a non-EU country and delay or limit any time in the EU.

    Let's assume for a moment this was to be reversed in 2 years. Once buying habits are changed, they're very difficult to change back. Others step forward to pick up the business and they don't relinquish it when things change.
  17. RER

    RER Senior Member

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    Uncertainty is nothing new to business. Tariffs and trade are a two way street. I spent my career in furniture manufacturing. Job shop supplying production to many of the major US furniture manufacturers. A very successful multi generation family business. I watched as almost all US furniture production moved to China and Viet Nam.

    The US government stood on the sidelines and watched. Even encouraged it actually. The manufacturing job losses were devastating and even with the improving economy those jobs are long gone. What a lot of people don't understand is that there are places in the US where $18/hour is a good solid job and those jobs were lost by the hundreds of thousands.

    The federal government cares more about it's own finances than they do about the average American and they make their money by churning yours. They want you to cash your paycheck on Friday, spend it all over the weekend and go back to work broke on Monday and start all over. They are sacrificing our economic future in exchange for the most and fastest buck they can make right now. A $5 beach chair at Walmart starts to get pretty expensive when you factor in the American jobs they cost. The trade deficit is a ticking time bomb. Doing nothing is not an option.
  18. Capt J

    Capt J Senior Member

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    How does this effect a used boat? Is there a tariff on a used boat? There is always a work around. I have seen owners on new boats in countries with high import duties bring the boat in as a used boat. One owner bought a brand new Euro yacht and had it shipped to here in the U.S., titled it in the BVI's in 1 company, used it for 2 trips to the Bahamas and after a couple of months, then titled it in his home country as a used boat and then shipped it there.

    As for US builders, their actual build cost will not go up. If you look at a Searay or Hatteras, virtually all of the Equipment that goes into building that boat is U.S. made...…. engines, generators......the fiberglass resin, matting.....glass, appliances....etc.. etc.... Same with the Euro boats, all of their equipment by and large is Euro made.

    I agree with RER to a large extent. BUT, can you get those furniture or lawn chair jobs back once they're gone? It's real hard to entice someone to start building in the U.S. But the government has enticed a lot of people with the lower corporate tax that is now more in line with the rest of the world.
  19. RER

    RER Senior Member

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    The federal government has historically turned a blind eye to tariffs and trade deficits in favor of cheap consumer goods for the reasons I stated above. That strategy has got us to where we are today. With an untenable trade deficit. The marine industry segment plays a relatively minor role in all of it.
  20. Pascal

    Pascal Senior Member

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    Yesterday I picked up two new Aquamet 22 HS 3 1/2" shafts at a reputable prop shop here in Miami. They get the raw material from a distributor in Georgia and machine the shafts to specs themselves

    Surprise surprise. When I looked at the paperwork and strength certification it turns out the shaft stock is made in... Italy!! I guess we can't make stainless steel bar here in the US at least to compete with foreign countries. It doesn't make a lot of sense since the labor on the machining represent a good chunk of the cost of a $7000 shaft and it was done here in Miami ...