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  April 27th, 2018 | Written by

Job Losses, Economic Downturn in Wake of Aluminum Duties

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  • Aluminum tariffs will increase the cost of manufacturing 111,000 recreational boats annually in the US.
  • Tariffs will result in less domestic production, higher prices, and fewer jobs.
  • US manufacturers depend on a competitive global market and fair pricing, even if they use domestic aluminum.

The Department of Commerce’s decision to implement a countervailing duty and a proposed anti-dumping tariff on common alloy aluminum sheet will significantly increase the cost of a primary material used to manufacture more than 111,000 new boats annually in the United States.

Commerce’s countervailing and anti-dumping tariffs on common alloy aluminum sheet from China are expected to total at least 31 percent, and potentially in excess of 113 percent.

This tariff will be compounded by the Trump administration’s recently-announced 10 percent tariff on all aluminum imports and a 25-percent tariff on a long list of products from China, including marine navigational, component, and engine equipment.

History has shown that these tariffs threaten to increase the cost of manufacturing in the US, which will in turn result in less domestic production, higher prices for American consumers, and fewer jobs for American workers.

Thom Dammrich, President of the National Marine Manufacturers Association (NMMA), noted that aluminum is a primary material used to make 43 percent of recreational boats. “American manufacturers, like those in our industry, depend on a competitive global market and fair pricing, even if they exclusively use domestic aluminum,” he said. “In fact, it is estimated that more than 90 percent of the aluminum used by recreational boat manufacturers comes from domestic mills.

The “announcement by the Department of Commerce is a direct threat to the stability of the recreational boating market, and by extension hundreds of thousands of American jobs,” he added. There are 650,000 American workers who depend on the US recreational boating industry.

The countervailing duty, a portion of which will be implemented retroactively, is expected to force domestic prices to skyrocket and further exacerbate supply shortages for marine manufacturers.

“Prior to this formal decision, our members were already feeling the effects of uncertain trade policy,” said Dammrich. “The countervailing duty, in addition to the administration’s recently announced 10 percent Section 232 tariff on all aluminum imports, have already sowed confusion and caused disruptions in both supply and price, significantly weakening positive sentiment among recreational boating businesses and forcing some to slash planned bonuses and other investments. And things will only get worse when Commerce issues their ruling on antidumping tariffs, further complicating the matter.”

The Commerce ruling and the collection of tariffs jeopardizes the growth of an industry that has spent the past ten years rebounding from the Great Recession. “In 2016, total recreational marine expenditures reached a high of $36 billion,” said Dammrich. “What’s more, 95 percent of boats sold in the US are made in the US.”

The industry had expected to grow in 2018 and beyond, but the economic instability caused by Trump administration tariffs threatens the sector. “Tariffs aren’t the solution,” said Dammrich. “Instead, we urge the administration to deal with these issues through a negotiated trade agreement with China.”

Aluminum recreational boats represent 43 percent of new power boat sales each year in the US, accounting for $3 billion in annual retail sales.