How the Tariff on US Built Boats Will Affect 2019 Boat Pricing

By now you may have heard that the ongoing trade war between the US and the majority of the world has claimed a victim that is close to our hearts. Boats built in the US and imported to Canada are currently being charged a 10% tariff. This came into effect on July 1^st 2018, and remains so at the time of this writing. On top of that, some raw materials for the boat manufactures are being tariffed as well (this is particularly true in the aluminum segment of pontoons and fishing boats).

We in the marine industry have known about the possibility of them for quite some time and remain hopeful that they will be short lived. There is no current indication that there is an end or solution in sight.

What does this mean for you? Nothing if you aren’t buying or selling a boat this year or next (although we do not have any idea how long they will last). If, however, you are in the market currently, or think you might be in the spring of 2019, you will want to read on to find out the impact and possible savings to be had by quick action. Here is are some example of how this tariff is going to affect prices going forward.

New 2019 Boats Potential Price Increases:

• Example: A new boat that sold for $40,000 in 2018
  • Assuming an average selling margin for successful dealers, and an exchange rate of 1.27 when it came over in 2018
  • Assuming a current exchange rate of 1.30, the same dealer margin, an increase in pricing from the boat building or 5%, and the 10% tariff
  • Same new boat in 2019 = $47,300 (a combined price increase of about 18%)

Notes about the new 2019 pricing:

1. The exchange rate can change and will either amplify or decrease this affect
2. Boat dealers do not all sell at the same margin and this can have the same impact (larger or small increase)
3. Not all boat manufactures are increasing prices by the same amount. Some are as low as 3%, and some are as high as 12%!
4. With all of these variables in play, we estimate 2019 prices on the same boats are and will be 15-25% higher in 2019

Non-Current (2017/2018) Boats:

• All dealers will have a choice here and it will depend on market conditions, inventory levels, and over all dealership values. There should be no immediate price changes, although we have seen some “creeping” up of prices, and more consistently, as lack of end-of-season discounts on 2018s as dealers know there is and will be an increase in demand for these non-tariff boat

Used Boats:

• Used boat pricing always follows the trends of new boats
• The effect on used boat pricing is less dramatic and lags the market a few months
• Our estimate is that there will be an increase in demand for used boats in 2019, and with the increase in pricing of new, to see prices higher by about 7-20% on the equivalent “5 year old used boat”, etc.

What if I am trading a boat? Because the impact (duration) of the tariff is still unknown, I expect dealers to be cautious and likely are giving about 5% higher trade values than they would have otherwise at this time of year to capture good used inventory. Ask for a bit more and you likely will get it.

What does this all mean for a boat buyer? If you are thinking about being in a new boat now, or at any time during the 2019 season, take action and scoop up a boat deal now. Worst case scenario is the tariff is repealed, that you found a great boat for your next season at current pricing. Best case scenario is that you save 5, 10, 15, 20 thousand or more on that boat that you want. Because of the time of year, make sure you ask for free storage as well and you likely can negotiate that in too. Those decisions could add up to dramatic savings and will pay for a serious pile of fun next year!