In late September, with a deadline only minutes away, the U.S., Canada, and Mexico reached a deal to revamp the North American Free Trade Agreement (NAFTA). The new agreement – officially referred to as the United States-Mexico-Canada Agreement (USMCA) – was heralded by NMMA President, Thom Dammrich and NMMA Canada President, Sara Anghel as, “excellent news for the recreational boating industry and countless others that rely on the free flow of goods in North America.” Dammrich and Anghel also applauded President Nieto, President Trump, and Prime Minster Trudeau for striking the deal and called on all three countries to immediately review and approve the agreement.
While USMCA preserves core elements of the previous trilateral trade pact and contains key industry priorities, it does not address Section 232 tariffs or subsequent retaliation from Canada and Mexico targeting U.S. boat imports (10 and 15 percent tariffs, respectively). As a result, millions of dollars of orders have been canceled, causing severe economic hardship and the threat of job losses in the industry. However, USMCA cleared the deck for negotiators to turn to retaliatory tariffs, and NMMA is urging all three countries to stay at the table until this issue is resolved.
The European Union’s (E.U.) 25 percent retaliatory tariff on U.S. boats also remains in place. There has been positive news on this front, with the U.S. recently announcing that they are looking to negotiate trade deals with the E.U. and the United Kingdom (U.K.) next.
To that effect, NMMA, the European Boating Industry (EBI), and the International Council of Marine Industry Association (ICOMIA) sent a joint letter on October 11 to the U.S. Trade Representative (USTR), Robert Lighthizer and EU Commissioner for Trade, Cecilia Malmström expressing their strong support for the ongoing trade discussions. In addition, NMMA is providing feedback to the U.S. government regarding the marine industry’s experience with trade-related barriers affecting exports to the U.K. This effort comes as both countries explore ways to strengthen trade and investment ties and provide commercial continuity as the U.K. prepares to leave the E.U.
Tensions between China and the U.S. do not appear to be de-escalating anytime soon. To date, $250 billion worth of Chinese imports – segmented into three lists of $34 billion, $16 billion, and $200 billion – have been hit by the U.S.’s Section 301 tariffs. A 25 percent tariff has been applied to items on lists one and two; goods on list three were hit with a 10 percent tariff, which increases to 25 percent on January 1, 2019.
Collectively, more than 350 marine related components, materials, and parts are affected by Section 301 tariffs. Plus, China responded with tariffs ranging from 5 to 10 percent on $60 billion worth of U.S. exports, including boats, making China the fourth market to retaliate against the U.S. recreational boating industry during the global trade war.
To provide reasonable relief from Section 301 tariffs, USTR developed a system for American companies to request exclusions for products on the first two lists. NMMA has supported several industry requests for exclusion. Industry stakeholders that filed a request on or before the October 9, 2018 deadline should contact NMMA for additional assistance and letters of support.
As of today, the U.S. government has not provided an exclusion process for the third list. Recently, a bipartisan group of 169 members of the U.S. House of Representatives – led by Congresswoman Jackie Walorski (R-IN-02) and Congressman Ron Kind (D-WI-03) – sent a letter urging USTR to establish an exclusion system for the third tranche. NMMA and their coalition partners have also encouraged swift action on implementing a process for list three.
NMMA believes that cracking down on China for their numerous trade infractions is necessary and long overdue. However, they are opposed to the U.S. government’s current strategy of tit-for-tariffs. NMMA is cautioning against levying additional tariffs on Chinese goods, and instead, is calling on both parties to resolve this conflict through negotiations.
Earlier this week, the Canadian government announced that they will provide targeted tariff relief to importers of certain U.S. goods, including boats, affected by retaliation. A refund for the 10 percent surtax will be issued for boats that entered Canada on or after July 1, 2018, but only if they were purchased on or before May 31, 2018. While this action only effects a handful of transactions and does not end retaliation, NMMA is encouraged by the Canadian government’s acknowledgement of the industry’s economic importance.
Looking ahead, the recreational boating industry will testify before the International Trade Commission (ITC) on Tuesday, October 30, 2018, regarding the ongoing antidumping and countervailing duty investigations into Chinese common alloy aluminum sheet. The compounding effect of the U.S. government’s 130 percent duty on Chinese aluminum sheet and Section 232 tariff of 10 percent on all aluminum are causing domestic prices to skyrocket upwards of 40 percent. Plus, it is becoming increasingly challenging to keep up with demand for aluminum sheet by relying on domestically produced material alone. To resolve this situation, NMMA is asking the ITC to dismiss the case.
NMMA will continue to monitor these issues and advocate for the industry’s priorities. For more information, please contact NMMA Senior Vice President of Government Relations and Legal Affairs, Nicole Vasilaros at nvasilaros@nmma.org or NMMA Director of Federal Affairs, Lance West at lwest@nmma.org.
Canadian-based members of NMMA should contact NMMA Canada President, Sara Anghel, with questions at sanghel@nmma.org.
