Fears that Canada-U.S. trade tariffs could sink some Okanagan boat dealers
Dominika Lirette | CBC News | Posted: March 28, 2019 2:58 PM | Last Updated: March 28, 2019
Smaller businesses struggling to absorb 10% hike on U.S. boat imports, says one GM
Boat dealers in the Okanagan are struggling in the wake of a 10 per cent import tariff on boats and other select goods from the U.S. implemented last July.
The tariff was the federal government's retaliation to U.S. President Donald Trump's decision to impose levies of 25 per cent on steel and 10 per cent on aluminum imported from Canada.
It meant that boat dealers have had to pay an added cost on inventory they bring in from the U.S., said Durell Wiley, vice-president of operations and general manager at Dockside Marine Centre in West Kelowna, B.C.
"As a consequence, we have reduced the number of boats that we have ordered for 2019, because we're deeply concerned about how many we will sell with an added price tag on them," he said.
Absorbing costs
There aren't very many domestic boat manufacturers that dealers can use to replace their U.S. inventory, said Wiley.
Last June, the National Marine Manufacturers Association wrote a letter to the federal government voicing concerns that there aren't enough Canadian boat manufacturers to sustain the market. The letter states that more than 65 per cent of boats sold in Canada in 2017 were imported from the U.S.
"I think most dealers will have to absorb the costs [of the new tariff]," said Wiley.
Bigger operations like the Dockside Marine Centre may be able to withstand the added costs, but smaller operations that don't offer a diverse range of products and services might not be able to manage, he said.
"Smaller retailers are giving up. Many of them have decided not to pursue new boat sales anymore," he said.
Wiley also cites other factors that have affected business for most boat dealers in Western Canada, including pipeline disputes between B.C. and Alberta, the Albertan economy, B.C.'s new speculation tax and smoke from wildfires.
"We've had some headwinds and as a consequence most of the industry has been lagging in sales," he said.
'Great news' for Canadian manufacturers
Boat manufacturer Campion Marine in Kelowna, B.C., is one of the few Okanagan businesses benefiting from the tariff.
"For us, it gives us an excellent opportunity to promote a Canadian-built product," said Brian Milligan, Campion's director of sales and marketing.
"When the majority of the market has boats that they're selling that are American-made, it gives us an opportunity to grab some market share based on a price differential."
At a Toronto boat show in January, Campion nearly doubled its sales from the previous year, said Milligan.
He believes Campion will see an increase in demand this summer as there are now fewer options for Canadian dealers to choose from if they want to avoid the tariff.
"It's great news," said Milligan.