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US shipbuilding market rocked by EU's 25% levy on US imports

The US shipbuilding market has been rocked by defiant measures adopted by the European Commission which place an additional duty of 25% on a number of US imports.

The EU published the measures in a trade document drawn up last month in response to US enforced tariffs on steel and aluminium. The additional duties have been applied to all “sea going boats and yachts, with or without auxiliary motor, for pleasure or sports” imported from the US.

Nicole Vasilaros, senior VP of government relations and legal affairs at the National Marine Manufacturers Association (NMMA), told Boat International the trade dispute between the US and EU has already led to cancelled orders at US shipyards. The “significant” 25% duty increase has made the European market “basically unmarketable” for US shipbuilders, she said.

“It’s impossible to absorb that cost - there are other boat builders that can fill up that gap and we’ve heard from manufacturers that they’re having orders cancelled,” she said. “For many US builders between 10% and 30% of their business is exports. This is definitely causing an impact.”

While most builders have been able to avoid the cancellation of orders, Vasilaros voiced concern that affected builders would soon be forced to make job cuts. “You can’t go on having orders cancelled and not sustain a hit in your workforce,” she warned.

While recognising the “enormous” 25% levy, president of US based shipyard Christensen Jim Gilbert said no prospective client has mentioned the tariffs. He suggested the true effect of the trade war between the EU and the US would be felt in “market deterioration”.

“I can hear our competitors in Europe using the prospective tariffs as a way of discouraging their clients from looking across the pond for a boat,” he said. However, he described yacht owners as “savvy folks” who do not scare easily.

“I think many buyers who are thinking over the two to three-year term of construction would assume, as I am assuming right now, that this is a lot of strutting and chest-puffing and ultimately will not take place.”

He added, “There is simply too much for the US to lose in any trade war, especially with important, friendly European nations.” This was echoed by Vasilaros who said she hoped for a “quick resolution”.

However, the NMMA has joined the International Council of Marine Industry Association and the European Boating Industry to call on President Trump to end the escalating trade dispute.

In a letter addressed to President Trump, the presidents of all three organisations said the dispute had “effectively frozen the export market” and led to “marine dealers in the EU and Canada to cancel orders of US built boats.”

The letter continued, “Without a solution that immediately withdraws these tariffs or exempts key allies, the marine industry – and the global economy – will suffer.”

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