Boat in­dus­try wor­ries re­tal­ia­tory levies will sink sales

The Globe and Mail (BC Edition) - - SPORTS - ERIC ATKINS

The Cana­dian recre­ational boat in­dus­try says Ottawa’s move to levy re­tal­ia­tory tar­iffs on U.S. im­ports will drive up prices, ham­mer sales and cause lay­offs in a mar­ket where most boats are sourced from the United States.

Ottawa is im­pos­ing coun­ter­mea­sures on $16.6-bil­lion worth of U.S. goods, in­clud­ing 10-per­cent tar­iffs on out­board mo­tor boats, sail­boats and in­flat­able boats.

The move is in re­sponse to U.S. tar­iffs of 25 per cent on steel and 10 per cent on alu­minum, but it may also show­case how re­tal­ia­tory tar­iffs meant to hurt U.S. ex­porters can also hurt Canada.

Rep­re­sen­ta­tives of Cana­dian boat mak­ers and sell­ers are urg­ing Ottawa to drop boats from the tar­iff list or de­lay the im­po­si­tion be­yond July 1. They say the U.S. tar­iffs on Cana­dian alu­minum and steel will drive up man­u­fac­tur­ing costs at the U.S. fac­to­ries that sup­ply the Cana­dian recre­ational boat and boat trailer mar­ket. And the 10-per-cent tar­iffs charged on the boats when they en­ter Canada in­flate the price even fur­ther.

Af­ter taxes, boat prices could be up by 25 per cent.

Norm Mur­ray, part owner of Vir­den Recre­ation and Wa­ter Sports in Vir­den, Man., said the tar­iffs on both sides of the bor­der will drive up prices “out of reach for the average con­sumer” and might lead to job losses at the deal­er­ship.

“It may be ab­so­lutely dev­as­tat­ing,” Mr. Mur­ray said by phone.

Canada im­ports al­most $800mil­lion worth of boats in a year from the United States, com­pared with $307-mil­lion from the rest of the world, ac­cord­ing to in­dus­try data.

More than 65 per cent of the 100,000 new and used boats sold in Canada in a year are im­ported from the United States, said Sara Anghel, pres­i­dent of the Na­tional Ma­rine Man­u­fac­tur­ers As­so­ci­a­tion in Canada, which rep­re­sents deal­ers and mak­ers of boats, trail­ers and equip­ment in Canada and the United States.

Ms. Anghel said the tar­iffs will hit mid­dle-class Cana­di­ans, not­ing 60 per cent of boaters have a house­hold in­come of less than $100,000 a year. Her group has asked the fed­eral gov­ern­ment to ex­empt boats, or de­lay the tar­iffs for six months to al­low the mar­ket to ad­just.

“I would love for this to be a great op­por­tu­nity for Cana­dian man­u­fac­tur­ing, longer term, per­haps, but the fact of the mat­ter is there would be a short sup­ply. The Cana­dian do­mes­tic mar­ket could not keep up with the de­mand. The mar­ket re­lies very heav­ily on U.S.-man­u­fac­tured boats,” Ms. Anghel said.

The fed­eral gov­ern­ment’s pub­lic con­sul­ta­tion pe­riod on the coun­ter­mea­sures list ends on Friday. “Steel and alu­minum prod­ucts were in­cluded in the lists to sup­port Cana­dian steel and alu­minum busi­nesses and work­ers di­rectly af­fected by U.S. steel and alu­minum tar­iffs,” Jack Aubry, a spokesman for Fi­nance Canada, said in an e-mail. “Other prod­ucts were se­lected with a view to mit­i­gat­ing po­ten­tial im­pacts on Cana­dian busi­nesses, fam­i­lies, and con­sumers (e.g., al­ter­na­tives can be sourced from Cana­dian com­pa­nies or non-U.S. trade part­ners).”

At Mr. Mur­ray’s show­room on the Tran­sCanada High­way west of Lake Man­i­toba, many cus­tomers are putting off a pur­chase, wait­ing to see how the newly volatile trade re­la­tions with the United States will af­fect them and the broader econ­omy, Mr. Mur­ray said.

His cus­tomers gen­er­ally work in one of four sec­tors: min­ing, live­stock, en­ergy or farm­ing. All of these are de­pen­dent on trade with the United States and a few, such as the oil in­dus­try, are only just re­cov­er­ing from years of de­pressed prices and job losses.

“We’re just go­ing to get kicked again,” Mr. Mur­ray said. “It’s not just the ma­rine in­dus­try that peo­ple are wor­ried about. There’s go­ing to be tar­iffs on a lot of prod­ucts. Peo­ple are not just wor­ried about their pur­chases. They’re wor­ried about their in­come.”

Mr. Mur­ray predicts the tar­iffs will send up the price of a $50,000 alu­minum pon­toon boat to about $63,000. Fi­bre­glass boats, sub­ject to the im­port tar­iff but not the raw ma­te­rial ex­port tar­iff, will also rise, but not by as much. Mr. Mur­ray has “eight or nine” boats on or­der from a U.S. man­u­fac­turer based in Knoxville, Tenn., and is in “hurry-up mode” to get them shipped north. “All of the guys down there un­der­stand what’s go­ing on and are try­ing to get us our prod­ucts so we can avoid that tar­iff,” he said.

Rick Layzell, chief ex­ec­u­tive of the Boat­ing On­tario As­so­ci­a­tion, which rep­re­sents 530 mari­nas and boat deal­ers, said the tar­iffs will hit sales of alu­minum fish­ing craft and pon­toon boats. These are low to mod­er­ately priced boats that have been a bright spot in a recre­ation in­dus­try only just re­cov­er­ing from the re­ces­sion a decade ago, Mr. Layzell said by phone.

“The im­pact is very sig­nif­i­cant,” he said. “Our mar­ket will not with­stand that.”

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